SMEs seduce Citibank
The move is part of a strategy that is designed to bring the main indicators of the bank's performance in line with the results of the global Citibank in just three years, says Sławomir Sikora, the bank's CEO. The strategy envisages a clear segmentation of the corporate market and increased focus on retail customers.
As the budding economic recovery gathers strength, it is SMEs that benefit the most from strong consumption. While investment remains weak, bankers are increasingly turning to smaller clients in an attempt to generate new revenue streams.
One of the most significant barriers to capital expenditure growth is poor access to finance. Many firms complain that getting approval for a loan is nearly impossible, as shown by a report published by the Business Center Club last year, which revealed that more than half of all businesses had been refused a loan in the preceding 12 months. The report partly blamed banks for their excessively cautious attitude, saying they had drawn extreme conclusions from the portfolios of non-performing loans the economic slowdown had saddled them with. Indeed, this has even led to some of the largest banks actually seeing their assets fall last year, as the purging of their loan portfolios was not accompanied by new lending.
Struggling with bad loans, banks turned instead to retail customers and the relatively safe mortgage business (where bad loans total only 7.5 percent) in particular. Citibank has also turned its sights to that sector and entered into cooperation with Nykredit, a mortgage lending specialist. But now that the economy is gathering momentum, banks are likely to become less cautious about lending to businesses.
The decision by the country's fourth largest financial institution, with assets of more than zł.33 billion, to turn to SMEs can be seen as a sign of a shift in bankers' thinking. But credit growth is far from certain to pick up, as capital spending growth remains a distant prospect. Moreover, companies are sitting on a pile of spare cash, as their deposits last year soared by zł.13.2 billion, up by nearly a quarter. It is not unfeasible, therefore, that they may well use these funds to begin new investments.
Citibank is looking to sell around 14 percent of Bank Handlowy, of which Citibank has an 89.3 percent stake. At the time of Citibank's acquisition, the bank undertook to reduce its stake to no more than 75 percent by the end of the year. Citibank acquired the shares at zł.70, while the current price is zł.67.3.
As the budding economic recovery gathers strength, it is SMEs that benefit the most from strong consumption. While investment remains weak, bankers are increasingly turning to smaller clients in an attempt to generate new revenue streams.
One of the most significant barriers to capital expenditure growth is poor access to finance. Many firms complain that getting approval for a loan is nearly impossible, as shown by a report published by the Business Center Club last year, which revealed that more than half of all businesses had been refused a loan in the preceding 12 months. The report partly blamed banks for their excessively cautious attitude, saying they had drawn extreme conclusions from the portfolios of non-performing loans the economic slowdown had saddled them with. Indeed, this has even led to some of the largest banks actually seeing their assets fall last year, as the purging of their loan portfolios was not accompanied by new lending.
Struggling with bad loans, banks turned instead to retail customers and the relatively safe mortgage business (where bad loans total only 7.5 percent) in particular. Citibank has also turned its sights to that sector and entered into cooperation with Nykredit, a mortgage lending specialist. But now that the economy is gathering momentum, banks are likely to become less cautious about lending to businesses.
The decision by the country's fourth largest financial institution, with assets of more than zł.33 billion, to turn to SMEs can be seen as a sign of a shift in bankers' thinking. But credit growth is far from certain to pick up, as capital spending growth remains a distant prospect. Moreover, companies are sitting on a pile of spare cash, as their deposits last year soared by zł.13.2 billion, up by nearly a quarter. It is not unfeasible, therefore, that they may well use these funds to begin new investments.
Citibank is looking to sell around 14 percent of Bank Handlowy, of which Citibank has an 89.3 percent stake. At the time of Citibank's acquisition, the bank undertook to reduce its stake to no more than 75 percent by the end of the year. Citibank acquired the shares at zł.70, while the current price is zł.67.3.
