Raiffeisen Bank Polska moves to expand retail banking arm
Raiffeisen Bank Polska (RZB) has applied for exclusive rights to negotiate with Bank Pocztowy (BP) for a stake in the Bydgoszcz-based retail bank.
"We're waiting to hear from Bydgoszcz about the results of our letter of interest," said Jeffrey B. Millikan, RZB deputy president. "It will not be a takeover. It will be a cooperation with Raiffeisen to provide Bank Pocztowy with the necessary know-how and additional capital."
RZB's interest in BP stems from its plans to move into retail banking, with BP as one of the last banks still available on the market. RZB has also targeted BP for its nationwide network of branches.
"Corporate banks have become more interested in retail because they're looking for new areas to make money," said Andrzej Powierza, an analyst with Wood&Co. brokerage. "Retail banking might provide such opportunities for banks to launch new products and offer better services. The retail market is still not mature in many cases banks are lacking efficient services and clients are still queuing for too long."
RZB has been active in Polish corporate banking since 1991 and only now sees opportunities for retail operations. "Our products are targeted at clients with relatively high incomes and in the early '90s there was no market for such services," said Michel Hanlon, RZB managing director and head of retail operations. He said the sustainable growth of individual domestic savings was one of the factors that encouraged RZB to start its retail arm.
Last week RZB launched a personal savings account, its second product for individual customers. This follows the "Lokata" deposit account introduced last September. According to the bank, the Lokata account has attracted more than 10,000 clients, with deposits exceeding zl. 170 million ($40.5 million). On the strength of this, RZB hopes more clients will open personal savings accounts. "I would be disappointed if we had less than 50,000 accounts by the end of 2001," Hanlon said.
RZB has been looking at BP for more than a year, and last December RZB sent a team to perform due diligence, Millikan said. With zl. 86.1 million ($20.5 million) in share capital and some 90 branches nationwide, BP has zl. 1.58 billion ($376.2 million) in assets. The bank's low level of share capital and assets limits its lending activities. So, according to Poczta Polska spokesman Krzysztof Baczyk, the Bydgoszcz-based bank needs an injection of fresh capital and know-how.
Poczta Polska, the state-owned postal service, holds a 66.7% stake in BP. The remainder is in the hands of Prokom Investment, a subsidiary of software company Prokom, which is listed on the Warsaw Stock Exchange. "Bank Pocztowy fits our strategy to expand into consumer banking," Millikan said.
But Millikan is also wary of potential competitors. He admitted that RZB could face stiff competition over the BP issue. France's Paribas, for example, has similar plans to use BP as a foothold into retail operations in Poland, and already has a joint venture with Poczta Polska. Poczta and Paribas are shareholders in Pocztowo Bankowe PTE pension fund.
However, RZB is optimistic about its chances to win the battle for BP. It has the funds for a major cash injection that BP needs. RZB posted good results for the first nine months of 2000. The bank's assets increased by 29% to zl. 4.45 billion ($1.1 billion). Meanwhile, interest from lending surged to zl. 308.9 million ($73.5 million) from zl. 155.3 ($37 million) after nine months of 2000.
