Best bank – BPH PBK
Best equity house – CDM Pekao
Best debt house – Citigroup
Best M&A – Bank Austria/CA-IB
Polish banks have not had an easy year. The economy is growing slowly, and bad loans continue to drag down banks’ balance sheets. Kredyt Bank, owned by KBC, had a particularly tough time. It lost around e100 million on non-performing loans last year, which cost its senior managers their jobs.
BRE Bank also had a tough year in corporate banking. Even Pekao, Poland’s largest commercial bank, found the going rough, with net interest income in Q1 2003 down 20% year on year, and operating income down 24%.
One bank, however, has actually improved its position in the first quarter – BPH PBK, which takes the best bank award.
In Q1 2003, the strengths of the merger between BPH and PBK, owned by HVB and Bank Austria respectively, really started to show. All the analysts spoken to picked out the bank as the strongest performer this year. It completed the merger of its IT systems in record time, and turned in some strong results in Q1 2003. Net profit rose 79% and operating costs fell 3.1%.
The bank is rapidly becoming a leader in innovative financing. It has won mandates to finance several real-estate deals through securitization, which are groundbreaking deals for emerging Europe. It is also the market leader in interest rate derivatives trading, with volumes increasing by 127% since 2002. In bond origination, BPH PBK has moved from 13th place to fifth in the league table in a year. In bond and equity trading, it still lags far behind CDM Pekao, though if it merges its operations with CA-IB it will be a much closer competitor.
Its research and economics department, led by chief economist Krzysztof Rybiñski, is well respected. Clients say the bank’s custody services are superb, and it won an award for best corporate cash management from the Business Centre Club. Analysts say its treasury has benefited from high-level poaching from BRE Bank.
Finally, the bank is positioned to cash in on the strengths of its parent bank. With HVB it has done the most mandated loans in the past year (equal with DrKW) and, through CA-IB, the most M&A deals.
CA-IB won the mandates for several M&A deals, including the acquisition of 74% of Bankowe Przedsiebiorstwo Telekom Telbank by Tel Energo, and the acquisition of a controlling stake in Polfa Grodzisk by Richter Gedeon.
For these reasons, BPH PBK seemed, if not the biggest or most profitable bank in Poland, certainly to have had the best run in the past 12 months.
Other good performers in the past 12 months are BIG Bank Gdanski and Bank Zachodni WBK. Both have climbed up among the top banks and are looking in a strong position. One analyst says BZWBK has the best management team and best risk management of any Polish bank.
In the debt market, Citigroup and JPMorgan are tussling for leadership in bonds and loans. JPMorgan can claim some noteworthy victories – notably its dominance of the loan market and the mandate for Poland’s MTN programme.
But Citigroup/Bank Handlowy wins the best debt house award, partly for its sovereign deals, but above all for its strong work in corporate debt. It set up a Zl1 billion ($264 million) public bond programme for TPSA, which was a landmark corporate deal for the country. It has also set up a similar-sized programme for FCE Credit Polska, guaranteed by Ford Motor Credit Company, as well as smaller programmes for credits such as Can Pack, Echo Investment, Volkswagen and SCA Hygiene. Citigroup has also won the mandate for a $3 billion securitization deal for the Polish Power Grid Company, to be launched next year, and has arranged a local securitization for Urtica Finance.
Deutsche Bank deserves an honourable mention for its dominance in zloty-denominated bonds – it did all five issues in the first quarter of 2003.
CDM Pekao is the clear leader in both equity and debt trading.
Its market share in equity is 13.7%, with only CA-IB and DM PBK close, with 11% each. In bonds it has a 40% market share, according to the Warsaw Stock Exchange.
