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The US treasury market reaches breaking point

The US treasury market reaches breaking point

The structural issue that could cause the world's market of last resort to grind to a halt

Abigail Hofman:

Abigail Hofman:

I wonder if ______ is an extremely optimistic person or in a cocoon of senior management denial

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September 2000

One last local champion


The last of Poland's large commercial banks to be privatized could prove to be the most troublesome.




The last of Poland's large commercial banks to be privatized could prove to be the most troublesome. The clamour is growing among the opposition Left Democratic Alliance (SLD), and the more populist elements of the ruling centre-right coalition, for state savings bank PKO BP- the oldest and biggest of the country's banks - to stay in Polish hands.
"Preposterous," is the response of Henryka Pieronkiewicz, president of PKO. "There is no Polish strategic investor who could guarantee the capitalization which is vitally needed by the bank. Privatization is not feasible without the involvement of strategic foreign investors or foreign pension funds operating on the Polish market."
The bank is already being preened for a sell-off likely to take place before the end of next year, says Pieronkiewicz. In May, it was transformed into a treasury-owned joint-stock company. The government has also proposed a draft bill, allowing it to provide funds to pay off the bank's massive communist-era portfolio of mortgage debts - the main obstacle to privatization. Meanwhile, image consultants have been brought in to give the bank a makeover, adding a smart orange dot to its blue logo and changing the BP in its name from "bank panstwowy" (state bank) to "bank Polski."
Pieronkiewicz's modernizing zeal may come to naught, however, if her political opponents succeed in selling the bank to a local investment consortium or through a public share issue that keeps ownership dispersed, even though mass share-ownership is no guarantee that foreigners will stay away. The fact is that there are no potential Polish owners with the expertise and capital to revamp PKO - which bears many of the scars of its past as a Financial monolith. It was created as a state savings bank in 1919 and kept its brand name in communist times. It has some 7,000 branches, serving 4 million depositors, but its customers' average monthly income is less than $420.
At the same time, there is much to entice a foreign investor. PKO still is a market leader in many categories, controlling, for example, 30% of the fast-growing credit card market.
"Polish companies have short decision-making horizons because of their weak capital position," says Janusz Lewandowski, a former privatization minister and member of parliament with the liberal Freedom Union. "A privatization the size of PKO isn't feasible without foreign involvement."






It is not my policy to kick those who are in agony rolling in the mud. I prefer to be in the vanguard of assaulting the unassailable rather than throwing tomatoes as the mob’s mood turns ugly

- Abigail Hofman

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