Research guide to banking services in eastern Europe
West is welcomeThe Polish banking sector is just emerging from its infancy. In 1988 the first banking reforms took place with the spin-off of the largest Polish retail bank - PKO BP - from the central bank structure. One year later a new banking law was introduced and nine regional commercial banks were established. Today the Polish banking system is quickly modernizing, helped substantially by foreign banks.In order to ensure continued assistance for the domestic banks, the National Bank of Poland, Poland's central bank, will licence only those foreign banks which agree to participate in the restructuring of the Polish banking sector. The finance ministry, on the other hand, wants to consolidate the largest Polish banks to enable them to compete against foreign players in Poland. At the same time, efforts are being made to attract foreign capital to the banking industry - for instance, two more large-scale privatizations are scheduled for 1996. Four years ago, good intentions and $1 million were enough to establish a bank in Poland and do business in this potentially attractive market. Among those banks to take advantage of setting up operations in Poland were Austria's Creditanstalt, which established its branch in Warsaw as a Polish company with foreign participation, while Morrison Knudsen Corp and Frederick T Field with some Polish assistance established AmerBank, which mainly services American companies and prosperous retail clients. Two American financial institutions, the Polish-American Enterprise Fund and the Enterprise Credit Corporation, established a universal - although regional - bank in Krakow called PPA Bank. Poland has also granted operating licences to Société Genérale, Raiffeisen Centrobank and Bayerische Vereinsbank, to service mainly their clients they followed to Poland. Bearing in mind the promising prospects of the Polish economy (private sector growth, systematic growth of GDP estimated at 5.5% in 1996, decreasing inflation and gradual improvement of the trade exchange balance), a growing number of well-known foreign banks have applied to the National Bank of Poland for an operating licence. These foreign banks include Deutsche Bank and Dresdner Bank of Germany and ABN Amro of the Netherlands. Taking into account the weaknesses within the Polish banking sector and the extremely strong foreign competition, Hanna Gronkiewicz-Waltz, the president of the central bank, clearly defined the rules for foreign banks to carry out business in the Polish markets. These rules are still valid, although they have been slightly liberalized in practice. A foreign bank (or any other party for that matter) interested in obtaining a Polish operating licence has to meet a number of conditions. It must provide Polish zloty founding capital equivalent to Ecu5 million and it must submit a special application with detailed information on the bank's financial standing (which is then reviewed and verified with great care). The whole procedure used to take a year or more, but the waiting time has been shortened recently as the central bank has streamlined its procedures. However, it is not sufficient to simply submit all the required documentation. Like other central banks in former communist countries, the National Bank of Poland imposed an additional rigid condition on foreign banks: they can launch activity in Poland only if they participate in the restructuring of the Polish banking sector. In practice this participation means investing (in one form or another) in an existing Polish bank. These rules were introduced so that the National Bank of Poland (unofficially promising a licence in exchange for improving the asset base of a troubled bank) could attract foreign capital to help prevent small private banks from going bankrupt. This is how ABN Amro, Westdeutsche Landesbank and Deutsche Bank entered the Polish market. Today, nearly all of the big international banking names are present in Poland: American Citibank, Swiss CS First Boston, German Dresdner Bank and Dutch ING Bank (which holds a 25.92% stake in Bank Slaski SA and wants to acquire more. It also has a 5.31% stake in Bank Przemyslowo-Handlowy SA). How do the foreign banks make money? First of all the banks provide full service to multinational conglomerates and to the largest and most dynamically developing Polish companies. Another major source of income is government securities operations. Foreign banks are also active on the Warsaw Stock Exchange, sometimes being able to generate a short-term bull market. Poland's top financial specialists are aware that the Polish banking sector needs fresh capital inflow. In 1994 the results of most of the banks were poor, however 1995 brought a very big turnaround. The sector as a whole is generating profits and most of the banks are gradually improving their balance sheets. The country seeks foreign banking capital which will strengthen the Polish banks so that they can become fully qualified players in all aspects of the financial markets. The Polish government is encouraging well-known foreign banks to invest not only in small and troubled organizations, but also in large and popular banks, thus participating in their privatization. This investment is not only helpful because it is an inflow of capital, but it also provides a transfer of the necessary know-how especially in the areas of new products, marketing, services and technology. There have been concerns voiced in various communities about the ability of Polish banks to compete with foreign banking giants. Such questions are a growing concern for the decision-makers who shape Polish financial sector policy. With the increased foreign competition in mind, the government has recommended to consolidate the largest Polish banks by creating two capital groups around the domestic "giants" - Bank Handlowy w Warszawie SA and Bank Pekao SA. Initially suggested about six months ago, this idea is currently being debated in parliament and the process is now likely to include only the state-owned banks rather than any private ones. Another step forward is the privatization of two more state banks with a possible majority participation by foreign banks. A tender has already been organized with eight consortiums bidding for the mandate to advise the ministry of finance on the privatization of one of these state banks. No schedule is set yet for the privatization of the second bank. Many experts agree that 1996 should be another good year for Polish banks. Although the Polish banking sector is just five years old and still has plenty of hard work ahead, it could be a very interesting investment opportunity because its potential to grow is still vastly untapped. Source: Parkiet Feb 10-12 1996 Poland facts and figures
Bank Slaski SA ul Warszawska 14 40-950 Katowice Poland tel: (+48 32) 153 72 81/5 fax: 153 73 64 or 153 99 30 telex: 0312727 contact: Jerzy Bucki Department of Marketing and Public Relations tel: (+48 32) 157 26 84 fax: (+48 32 )157 27 93 Bank Slaski SA is one of the three largest banks quoted on the Warsaw Stock Exchange. It generated as much as 12.1% of the Polish banking sector's total gross profit last year. Also the bank usually ranks in the top five in all financial markets in Poland. It came in third place in the most recent ranking of the best banks conducted by the Gazeta Bankowa. |
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