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Acquisition costs rise as buyers race for quality

Most of the prize assets have been snapped up as bank privatization draws to an end in Europe’s emerging markets. Those banks that remain on offer are getting more pricey. But impending European Union accession for several countries means this is still an appealing market and is driving strategic change among both veteran players and big-spending newcomers.

Warsaw: consolidation among western banks
is reshaping local markets to the east

In the months since Citibank's surprise December announcement that it would acquire a majority stake in Poland's largest trade bank, much has been made of the US bank's skill and stealth in doing the deal. Not only did Citibank secure terms acceptable to Warsaw-based Bank Handlowy, it carefully avoided offending nationalist sentiment among those increasingly vocal Poles outraged by the sale of the country's family silver to westerners. Handlowy after all has a 131-year heritage in Poland.

But what has been less remarked on following the completion of the $1 billion deal is the fact that Citibank's decision to buy an established franchise in central Europe's largest market marks a significant change in strategic tack. In Poland, unlike most of the other 100 countries where it has operations, Citibank is buying rather than building.

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