Tough at the top

Poland's biggest bank is losing its top position due to the long-awaited merger of BPH and Pekao. However, as PKO BP's president, Andrzej Podsiadło, announced, the bank is not willing to settle for second-place. "We are not going to lay down our arms that easily," he said. "It seems that the difference between the new Pekao and us will be minor." The bank plans to increase its activities in Poland but also plans acquisitions in neighboring countries and the Balkans.

Podsiadło reassured investors that the bank has sufficient capital to afford the expansion. In February this year, the bank's deputy president, Kazimierz Małecki, said PKO BP could spend zł.3.5 billion on foreign acquisitions. At the moment the bank is interested in purchasing shares of the Serbian Panonska Banka and Vojvodjanska Banka. Podsiadło also plans to enter the Ukrainian market.

Recently, however, PKO BP failed in a tender for the sale of Croatian Splitska Banka, announced by the Italian Unicredit. Finally it was Societe Generale that acquired the Croatioan institution.

In Poland, PKO BP plans to decrease its operational costs and maintain return on equity (ROE) at the level of 20 percent. Last week, at the general shareholders' meeting, the bank decided to pay out zł.800 million in dividends, which equals 47.7 percent of last year's zł.1.7 billion profit. The bank's results for Q1 2006 are better than those for the same period last year, which resulted in the bank's share price climbing to zł.40 after the announcement.

The Treasury Ministry, which owns a 51.5-percent share in the bank, cut the number of members on the bank's supervisory board. Among those who lost their positions is Ryszard Kokoszczyński, a representative of the central bank.

The bank's strategy calls for around 4,500 employees to be made redundant.