Zloty signs
Pushed by a steep privatization revenue target of $3.7 billion-$6.23 billion for 1999 alone, the government has zloty signs dancing in its eyes.
It wants more than $3 billion-$5 billion for a 25-35% stake in telephone monopolist Telekomunikacja Polska (TPSA). It just sold 30% of the nation's largest insurer, Powszechny Zaklad Ubezpieczen (PZU), for an estimated zl. 3 billion-zl. 4 billion ($750 million-$1billion) to a domestic bank, Big Bank Gdanski, and a second-tier European insurance group, Eureko. And this week, a 38% stake in LOT Polish Airlines went to Swissair for a reported $180 million, a portion of which will go to state coffers and the rest will come to the airline in the form of a capital increase.
Selling the state jewels off for top dollar is important, but so is making sure that these companies have the right partner. In the quest to bring in the cash, the government in recent months has shown much more of an interest in price tags than in making sure the entity sold will emerge from the privatization as a restructured, efficient, competitive enterprise.
Take PZU. The government sold the insurance company, which could be poised to become a domestic and regional powerhouse, to a domestic bank and a hodge podge of mid-sized European insurers that comprise Eureko. The amount offered did top that of other bidders, such as France's Axa. But Axa, for example, is a global player in insurance, and it has invested in and restructured smaller insurance companies before. It also has the resources necessary to recapitalize PZU and expand its product offering. BIG Bank will have difficulty just putting together the purchase price, let alone have the resources to dig in and rework PZU.
And LOT. The word on the street is that the Swiss promised to make no wholesale changes in the airline's management or staff, and pitched expanding its fleet. Is that the right approach for an airline that needs a strong international alliance more than new planes?
The problem with the Polish economy, economists and institutional investors will tell you, is that its industry is not competitive on a global scale. That's part of what causes the bad current account numbers we so often here about. What they say, in brief, is that Poland needs more things to export, and more attractive domestic goods for its populous to buy rather than throw money at imports. Make no mistake, the transition is not over yet and much depends on how the government sells the crown jewels. Getting a good price now may calm political naysayers, but it's only part of the long-term answer.
It wants more than $3 billion-$5 billion for a 25-35% stake in telephone monopolist Telekomunikacja Polska (TPSA). It just sold 30% of the nation's largest insurer, Powszechny Zaklad Ubezpieczen (PZU), for an estimated zl. 3 billion-zl. 4 billion ($750 million-$1billion) to a domestic bank, Big Bank Gdanski, and a second-tier European insurance group, Eureko. And this week, a 38% stake in LOT Polish Airlines went to Swissair for a reported $180 million, a portion of which will go to state coffers and the rest will come to the airline in the form of a capital increase.
Selling the state jewels off for top dollar is important, but so is making sure that these companies have the right partner. In the quest to bring in the cash, the government in recent months has shown much more of an interest in price tags than in making sure the entity sold will emerge from the privatization as a restructured, efficient, competitive enterprise.
Take PZU. The government sold the insurance company, which could be poised to become a domestic and regional powerhouse, to a domestic bank and a hodge podge of mid-sized European insurers that comprise Eureko. The amount offered did top that of other bidders, such as France's Axa. But Axa, for example, is a global player in insurance, and it has invested in and restructured smaller insurance companies before. It also has the resources necessary to recapitalize PZU and expand its product offering. BIG Bank will have difficulty just putting together the purchase price, let alone have the resources to dig in and rework PZU.
And LOT. The word on the street is that the Swiss promised to make no wholesale changes in the airline's management or staff, and pitched expanding its fleet. Is that the right approach for an airline that needs a strong international alliance more than new planes?
The problem with the Polish economy, economists and institutional investors will tell you, is that its industry is not competitive on a global scale. That's part of what causes the bad current account numbers we so often here about. What they say, in brief, is that Poland needs more things to export, and more attractive domestic goods for its populous to buy rather than throw money at imports. Make no mistake, the transition is not over yet and much depends on how the government sells the crown jewels. Getting a good price now may calm political naysayers, but it's only part of the long-term answer.
