GE Czech bank sale revives ECM hopes
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GE Czech bank sale revives ECM hopes

IPO follows strategic sale of Polish unit; strong investor demand for CEE, say bankers.

Primary equity markets in emerging Europe received an unexpected fillip in April with the news of a big IPO from the Czech Republic. GE Money Bank, ranked the country’s sixth largest by assets, will come to market in early May. The listing, which could raise up to $1.7 billion, is set to be the largest in central Europe since June 2011 and the largest from the Czech Republic since before the financial crisis.

The deal should attract healthy demand, say bankers.“Investors are fairly positive on central Europe,” says Chris Laing, head of emerging markets ECM at Deutsche Bank. “The region offers growth rates that are reasonable by emerging market standards and above average for the European Union without the currency risks associated with developing economies at present.”

General Electric is selling GE Money Bank as part of a $200 billion strategic divestment of non-core financial holdings. The US group has already successfully disposed of one of its main bank assets in central and eastern Europe (CEE), having sold Budapest Bank to the Hungarian government for $700 million last year, while it is also set to sell BPH Bank to fellow Polish lender Alior Bank. 

Tomas Spurny, 160 x184


Tomas Spurny, 
GE Money Bank

The latter deal had been mooted 12 months earlier but was delayed due to concerns over BPH’s large Swiss franc mortgage portfolio and management changes at state-controlled insurer PZU, which owns 25% of Alior, following the ousting of Poland’s Civic Platform government in October. Tomas Spurny, GE Money Bank chief executive, confirms that it was also considered for a strategic sale. “Based on very positive feedback from institutional investors, however, the shareholders evaluated that now is a good time to list on the public market,” he says. 

The IPO will follow the same model as GE’s successful $1.7 billion listing of its Swiss financial subsidiary, Cembra, in 2013. The US group will initially offer 51% of its holding in GE Money Bank, with a view to selling down the remainder following a six-month lock-up period. GE will retain two seats on the bank’s supervisory board during the sell-down, which is expected to take two years.

The US group’s track record with European IPOs should boost demand for the Czech listing, say bankers. “The GE brand will appeal to investors who did well in Cembra,” says one senior ECM banker. 

Other selling points will include the recent strong performance of both the Czech Republic and its banks, says Spurny. Last year, the Czech economy was among the fastest-growing in the EU, expanding by 4.2%, while banking sector return on equity has topped 15% for the last six years.


Consumer lenders such as GE Money Bank are facing headwinds in the Czech Republic in the form of ultra-low interest rates and competition from challenger banks, as well as new consumer protection legislation and restrictions on interchange fees. Spurny is confident, however, that GE Money Bank, which will be rebranded as Moneta Money Bank following the IPO, can achieve growth “in the high mid-single digits” and a return on equity of 14% over the medium term.

“Growth has been de-emphasized recently as GE moved away from retail banking,” he says. “Being publicly listed will allow us to make broader inroads into the fast-growing Czech mortgage market.” The bank will also continue to focus on its other core market, SMEs, while looking to grow fee income through increased activity in bancassurance and wealth management, adds Spurny. “In the medium term, we are developing a digital strategy where we will position the bank more as a challenger to the incumbent large banks in the Czech Republic,” he says. “I have a dream of becoming a local champion one day.”

ECM bankers hope that, if the listing goes well, more companies from central Europe could be tempted to come to market. They admit, however, that potential supply remains limited. “Historically there hasn’t been much issuance out of these countries, with the exception of Poland, and that’s unlikely to change dramatically,” says Laing. 

Plans for a second big Czech IPO were cancelled at the end of April. The listing of a minority stake in gas storage and distribution unit EP Infrastructure, which was announced the day after GE Money Bank, had been expected to raise up to $1.3 billion. The company’s parent, Czech energy group EPH, was reported to have found a strategic buyer for the stake.

Further supply from the financial sector could, however, be on the cards. Leading Slovenian lender NLB is due for an EU-mandated privatization this year and is expected to opt for an IPO. Raiffeisen is also obliged to list a 15% stake in its Polish unit in the coming months under the terms of an agreement with the local regulator. The Austrian group’s subsidiary filed an IPO prospectus at the end of April but reports suggest the original June deadline for coming to market may be missed. 

Meanwhile, Hungarian officials have mooted the possibility of listing Budapest Bank. ECM bankers, however, are sceptical. “Budapest Bank still has significant issues,” says one. “The government will need to turn it around before it can start thinking about privatization.”

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