The pace picks up

The pace of the courting dance has picked up as Raiffeisen enters the next stage of negotiations with Bank Pocztowy.
By : Wioletta Buczek

   Raiffeisen Bank Polska, a subsidiary of Raiffeisen Zentralbank, said Friday its negotiations for a strategic stake in Poland’s small-cap Bank Pocztowy are to gather speed.

   The bank said a general agreement between Pocztowy and its majority shareholder Poczta Polska (Polish Post Office) – a prerequisite for Raiffeisen’s continuing negotiations – will be signed next week.

   “To the best of my knowledge, Poczta Polska and Pocztowy will clinch the general agreement next week,” said Jeffrey Millikan, chief executive officer of Raiffeisen Bank Polska. ”This agreement is important as it gives key information on Pocztowy’s future potential. Without that we can not continue negotiations for Pocztowy.”

   At the beginning of the year, Raiffeisen Bank Polska was granted exclusive rights to negotiations for a majority interest in Pocztowy. Last month, Pocztowy postponed the deadline for Raiffeisen to submit its final bid for the stake until June 15 as Pocztowy had not yet managed to strike a deal with Poczta Polska.

   Pocztowy wants to have access to Poczta Polska’s offices so that it could serve its clients via Poczta’s branches. While the total number of Bank Pocztowy’s branches is fewer than 90, Poczta Polska operates through a network of 7,800 offices across the country. In comparison, Raiffeisen Bank Polska operates 34 outlets across the country with its goal being to reach 45 outlets by year’s end. Pocztowy’s major shareholders are Poczta Polska with a 66.6% controlling stake, and Prokom Investment with a 33% stake.

   Millikan also said Raiffeisen is determined to wind down the transaction before autumn’s parliamentary elections. Asked about the possible conditions of the transaction with Pocztowy, Millikan said it is probable Pocztowy’s shareholders will agree on the capital increase that will be acquired by Raiffeisen Bank Polska. “Neither Poczta Polska nor Prokom intend to divest of their stakes in Pocztowy, so the capital increase for Raiffeisen will be the option,” he said.

   “Raiffeisen wants to have influence on Pocztowy’s management and that will be its purchase goal,” Millikan added. He declined to specify any further details of the transaction or say how much Raiffeisen is ready to invest in Pocztowy. But he said Raiffeisen expects the first profits on the investment no earlier than in 2003-2004. “We assume Pocztowy will give us its first profits in 2003-2004. Earlier, any money available will be used for the development of the bank’s infrastructure,” Millikan said.

   Last year, Pocztowy posted a net profit of zl. 7.4 million ($1.68 million). In comparison, Raiffeisen Bank Polska’s net profit last year reached zl. 21.5 million ($5.4 million) from zl. 7.6 million ($1.9 million) in 1999. The bank’s own funds grew by 17.1% to zl. 257.3 million ($64.3 million) compared to 1999.