This discussion we had actually already. After the outbreak of the financial crisis in 2008. It turned out that foreign financial groups, who have owned the vast majority of banks operating in Poland, do not guarantee their safety. Often they themselves had losses of billions of euros / dollars and had to ask for help from their governments. If the losses had appeared in Poland, operating subsidiaries here could not specifically rely on the recapitalization.
Some ideas went head to Poland gathered in deposits used to fund activities abroad. A common behavior was a reduction in lending – although at the same time praised the fact that we were green island on a background of red, mired in a recession in Europe. Because some foreign banks wished to sell its operations in Poland, the idea is to repolonizacji or otherwise domestication of foreign banks. In short: the idea was to reduce the share of foreign capital in banks in the belief that if decisions about the activities will be undertaken in the country, it should at this benefit the whole economy. The idea materialized Stefan Kawalec, now president of consulting firm Capital Strategy, and in the early 90s, deputy finance minister responsible, among others, for the banking sector.
Talk violently broke out, soon pulled tight. Maybe it’s because in practice repolonizacja not really leaving.
For now been hispanizacja
At the end of 2008. We have the first chance to increasing the share of domestic capital in our banks. Its Polish subsidiary issued on sale for US group AIG, rescued from bankruptcy by government aid. AIG Bank in Poland does not carry out operations on a large scale, even though it was among the leaders of a very profitable consumer finance segment (cash loans for the population, financing installment purchases). Among willing to buy into a natural candidate – PKO BP. However, the Americans finally chose a merchant Spanish group Santander, which acquired the bank merged with its Polish Santander Consumer Bank.
Another opportunity is the year 2011: The Irish group of Allied Irish Banks have to get rid of the majority stake Bank Zachodni WBK. And again among the volunteers was PKO BP (it was said also about a group of Leszek Czarnecki, who at the time of the crisis had bought several foreign banks, for the most part, however tiny, and the main motive was not so much repolonizacja, which can use the tax shield, ie a tax deduction for losses incurred by banks purchased in previous years). And again he failed. It worked for Santander, which, thanks to this acquisition came in the top five in Polish banks. And two years later he was in the top three by a further acquisition of Kredyt Bank from KBC, for whom getting rid of Polish bank was the price determined by the European Commission for agreeing to financial support from the Belgian government.
So far we have hispanizację rather than Polonization banks in Poland. In addition to small purchases from Leszek Czarnecki’s first clue that something can and Poles go was PKO BP redemption in 2013. Polish branch of the Swedish group Nordea. But when soon after the Dutch Rabobank issued for sale Bank BGZ, the purchaser again found outside the Polish – was it the French group BNP Paribas, which on a larger scale appeared at us through the acquisition of the Belgian Fortis, shortly after the outbreak of the crisis.
Where decisions are made
Today, the idea of reviving. For two reasons: for repolonizacji says aloud banks were preparing for governing Law and Justice. The ratio of foreign to domestic Polish banks would have to change from 60:40 to 40:60. A PZU starts building a banking group – state insurer 1/4 negotiated the purchase of shares of Alior Bank from the main investor, Carlo Tassara group, and seeks to purchase the next two institutions: Bank BPH SA and Raiffeisen Polbank. At their base they want to create an institution that will enter the top five biggest Polish banks.
However, neither the one nor the other approach is not to end promises to be the repolonizację, on what he thought Stefan Kawalec. And still I am thinking. One could see this a few days ago during a discussion about the domestication of banks organized by the Institute of Liberty. – In large countries of the European Union, is dominated by banks with headquarters in the country. In small countries dominated by foreign banks. Poland stands out: it is large, and the structure of the banking sector is typical for small countries – he said. Repolonizacja does not mean, however, for him, that foreign capital replaced by Polish: – The key is, where is the center of decision-making. Capital alone do not determine. There were times that of Deutsche Bank investors from Germany were less than 50 percent. shares. The OTP Hungarians are less than 30 percent. – reminded economist.
How did this happen? According Kawalec should lead to a situation where banks would be widely held. There would be a strategic investor, and that would mean more to say would have a board of directors. – In a few years, half of foreign banks may be banks with dispersed ownership – rated Kawalec. In his opinion, the state should help in realizing this plan. – should have a strategy stating that the security and stability of the banking system, decisions [concerning the functioning of domestic financial institutions] should be taken in the country. They should be accompanied by statutory provisions that prevent the concentration of capital. We should also introduce rules similar to those that apply in the United States: that you can not exceed the threshold of 10 percent. market share through mergers – presented his vision of the former deputy.
Fast met with the Contra however, by Andrzej Klesyk, president of PZU. – In Poland, the model of free float would not be good, because corporate governance is often not working. Shareholders do not come to the General Assembly. Some are written not to engage in the management of the companies. Some boards are fatal. Restrictions on market share to 10 percent.? Fortunately, that such ideas do not realize. Once there were ideas to share PZU regions, fortunately this did not happen – argued Klesyk.
Kawalec insisted, however, at the same time that the widely held is a good idea: – Around the world, banks are distracted capital. I do not think that only the Poles themselves, it is not advised.
Who wants to put money
Willing to teach money on redemptions banks at the hands of strategic investors, too many do not have. Two pewniacy this PZU and PKO BP, but their resources are limited. The insurance company has some 5-6 billion zł to spend on acquisitions. The state-controlled bank – half that amount. Other state-owned company? Doubtful. Private companies? The more so.
In the discussion of the Institute of Liberty topic yet appeared cooperative banks and cooperative savings and credit unions. The first would put 1-2 billion zł – provided that it would be a militia, which would engage the whole sector. But for now, cooperative banks themselves have big problems led to the resolution of what has to be their formula for action. In turn, the own funds of credit unions amounts to less than 200 million zł, and according supervision if cash take into account the adjustment recommended in the inspection, it would be several hundred million zlotys in the red.
We stick to the category of own funds because buying banks with borrowed money is not at stake – would not agree to this Financial Supervision Commission. Interesting is also the fact that today no longer calls to repolonizację engaged in open pension funds.
How much money you need for the domestication banks? If we assume that the sale will be banks that do not fall within the top five (in the same debate Klesyk said that banks engaged in places from six to twenty in the current formula actions do not survive), it would be required considerable amount. The market value of Bank Handlowy (75 per cent. Of shares is an American Citigroup) is a more than 12 billion zł, Bank Millennium (Portuguese BCP group has slightly more than half of the shares) – 7.5 billion zł, BGZ BNP (French have less than 90 per cent.) – Less than 5 billion zł.
Money that would have to spend on the banks actually may indeed turn out to be smaller. In the past few months, a large part of them firmly became cheaper. On the one hand, a consequence of the situation in the economy with low interest rates on loans earnings is lower. On the other – politics. Recently, we had a statutory commission reduction card. It is said to introduce a bank tax, which the entire banking sector could cost 5-6 billion zł per year. Work on the Act allows for conversion of mortgage loans, which according to estimates by the banks themselves would mean for them a cost of 9 billion zł. It all has to reflect on the valuations of the banks. And probably the closer will be the entry into force of the new legislation, the more even bounce.
There will therefore be a problem, he talked about Janusz Szewczak, chief economist of the National Credit unions: – Polish no society can be persuaded that swift and expensive to redeem it, which in the past has sold cheaply.
Anyway, during the recent convention in Katowice PiS program one of the experts had to say (“had” because we have heard second-hand relationship, in addition, not an impartial person, because representing the financial sector) that the bank tax will lead precisely to that of repolonizację easier.
But there is another side to this coin: when the profitability of banks declining (in this year’s return on equity dropped below 10 per cent., compared with western countries prolapse not bad, but a few years ago, banks earned relatively far more) , then buying them does not give hope for high returns. Unless – as PZU – it counts that several banks will be one, with one panel in place of three, a smaller number of branches and employees. It all will greatly cut down operating costs, and ultimately boast a high rate of return.
Repolonizacja or consolidation
So we come to the idea of the insurer to share in the consolidation of the banking sector. The idea is not new: PZU already tried to buy BGZ from Rabobank and combine it with Alior. Two years ago, he did not buy neither one nor the other. Now he takes Alior and on its basis will build a bank that is to be placed in close national forefront. Although, as you can see, the leadership of PZU no inconsistency, the decision on entry into the banking business may be somewhat surprising – in January announced a new strategy insurer was not out of the question. Announced only the “desire to create a joint venture with a partner bank.”
Doubt is more. Some analysts worried that banks will reduce purchases insurance company acquisition opportunities in other areas, for example. When it comes to international expansion. And most of all – whether PZU will not have too much concentration of risk in just one sector. A kind of surprise turned out to be a starting point: Alior Bank is considering indicators such as price to book value, the most expensive bank in our marketplace (and valuation fall rather than rise).
Finally, it is not clear what role he sees for himself PZU throughout the project: whether it will be only a financial investor or strategic – involved in the restructuring of the acquired banks? If the former, then there is also the question of what is the time horizon of investment banking PZU and that the company sees opportunities out of them (regardless of the fact that it is not yet closed the first transaction, another is perhaps a matter of months)? Perhaps the idea is that in a few years to sell the bank to a strategic investor from abroad.
It is possible that the answers to these questions will appear as you konkretyzowania bank, PZU project. For reflecting on the wisdom of the project “repolonizacja” These answers would not be without significance.
It should be emphasized that both the president Andrzej Klesyk, PZU, as well as Alior head Wojciech Sobieraj Bank are not talking about whether repolonizacji domestication, and just about inevitable consolidation of the banking sector in which they wish to participate. – The role of the observer with changing the structure of such a strategic part of the economy is absurd – says Sobieraj. – Consolidation certainly will. The question is whether they will do it if we – says Klesyk.
It is not hard to understand them: Although this Alior bank with a large foreign shareholder, but financial, in his case, decisions are made so not out of Polish, but in the Warsaw headquarters.
Let us use the opportunity
The fact that repolonizację look through the prism of income losses, is convinced Jan Krzysztof Bielecki, former head of the government, later governor of the Bank Pekao, and in recent years the head of the Economic Council of Prime Minister Donald Tusk. – I look at this process exclusively from the following perspective: if there is the possibility of business, use. If not, then you do not cover up any ideology – said during a meeting at the Institute of Liberty. He added that in the case of BZ WBK could earn 10 billion zł. In fact, at about so much it increased market value of the bank, Santander him since he took over, though without taking into account made at the time of the offering.
– When prywatyzowaliśmy banks in the 90′s. , a few people wanted to buy them, and the competence of management of our banks were doubtful. Now we have other possibilities, other staff and should be open to emerging opportunities. Decision-making center in Poland is not in order to “not bow to” the head of a foreign holding company, but in order to educate the relevant personnel to be able to manage the processes to stay ahead of international market in terms of innovation – Bielecki said.
By Klesyk problem with foreign owned banks is not only in one case: when the good economic situation in the country is both the headquarters of the parent company, as well as in the country of the subsidiary (ie such as Poland). The negative consequences are problems that occur simultaneously in one and in the other country. But there is also a problem when one is good and the other bad. If it is wrong from its parent company, it appears to inhibit the tendency also to other markets, even where the situation is good. And if the domestic market is, well, au subsidiaries poorly, it is limited to activities daughters.
While in Poland complain about foreign banks can be heard for many years, before the crisis, economists who studied the effect of origin of the capital in the banks on the economy, they perceived more pluses than minuses presence of foreign banks. Later it somewhat changed. But such. Stijn Claessens and Neeltje van Horen, the authors of the study “Foreign Banks: Trends, Impact and Financial Stability” published by the International Monetary Fund in 2012. Still noticed the benefits from the presence of foreign capital in banks. They pointed to the fact that they are generally better capitalized and less profitable than banks with domestic capital. In fact, less they engage in lending activities, but include because the foreign market is more difficult for them to operate than local competitors.
What are the effects repolonizacji, surely you can not say today. Its supporters will talk about independence from foreign capital. Opponents indicate that Greece’s banking system is based precisely on several major local institutions. Or that Slovenia was a very long time except in our region and not privatized its banks to international financial groups – ended the crisis and the need to issue a small country several billion euros to recapitalize banks.
Supporters Reminding that PZU itself is an example of a successful repolonizacji – a few years ago, the Treasury managed to reach an agreement after several years of conflict with the group Eureko and prompted it to sell shares of the insurer. Opponents respond that because repolonizacja will be based, but probably not for a distributed shareholding, but on the share of companies controlled by the state, in fact, we would have to deal with nationalization.
To However, the assessment was possible repolonizacji banks in the subject line something has to start happening.
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