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The Warsaw Voice » Other » September 3, 2008
Poland's banking sector
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Banks Grow in Strength
September 3, 2008 By A.R.    
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Poland's banking sector has escaped the fallout from the global financial crisis, while the robust economy is encouraging many banks to expand their networks.

It is also attracting new financial institutions to the country.

Poland's banking sector rapidly developed last year, at what was the fastest rate this decade, on the back of good macroeconomic developments and optimism among both businesses and households.

These positive trends led to record financial results. The banking sector's effectiveness improved and its 2007 net profit totaled zl.13.7 billion, a figure that was 27.8 percent higher than in 2006.

Most of the country's 645 banks and lending institutions reported improved financial performance last year compared with 2006.

In the first half of this year, Poland's banks earned over zl.8.6 billion, roughly zl.1.5 billion more than in the first six months of last year, according to data by the Financial Supervision Authority.

At the end of December last year, there were 64 commercial banks in Poland, including 54 that were either controlled or wholly owned by foreign shareholders. In addition, there were 581 cooperative banks nationwide. Last year's merger between a part of Bank BPH and Bank Pekao SA led to the emergence of the country's largest bank in terms of assets. PKO Bank Polski remains the market leader in terms of deposits and loans, number of branches and staff.

Bank Pekao SA and PKO Bank Polski are among the largest financial institutions in Europe with regard to the number of clients, financial performance and market value. In terms of assets, the Polish banking sector is still small compared with its counterparts in "old" European Union countries. The combined assets of Poland's banks account for less than 1 percent of the total assets of all banks in the EU, but the Polish banking sector is the largest in the "new" EU, accounting for more than 25 percent of all bank assets in the new EU member states.

Though competition is stiff on Poland's banking market, the sector's development potential is still substantial. This is largely due to the relatively low use of banking services in Poland. Poland as well as other new EU members reports a low level of banking sector assets and a low assets-to-GDP ratio. On the one hand, this shows that banking here is still less well developed than other sectors of the economy, and on the other-that it has great potential for growth. Just 48 percent of people have a bank account in Poland, while the average for the old EU is 74 percent. The value of loans for entrepreneurs and households in Poland stands at 32 percent of the GDP, while the average for the euro zone countries is 99 percent. The difference with regard to housing loans is also substantial. In Poland these account for just under 9 percent of the GDP, while the average for the 13 European nations using the euro is almost 40 percent.

The large growth potential of the Polish banking sector means that many foreign financial institutions are thinking of setting up branches here. According to consulting firm Deloitte, there is still room for new banking projects on the Polish banking market. What is more, Deloitte says, an analysis of the market and conclusions drawn from the development of banks set up in this country in recent years show that new banks could still secure a major position here.

At the start of the year Poland's Financial Supervision Authority had 14 applications from foreign lending institutions wanting to launch operations in Poland in the form of a bank branch, and three applications for a new banking license.

In April Italy-based Carlo Tassara Group financial group was given the all-clear by the Polish Financial Supervision Authority to set up a new bank in Poland. The group's Alior Bank will be the largest investment of this kind in Europe in 30 years and one of Poland's largest foreign direct investment projects. With an equity of zl.1.5 billion, Alior Bank will be one of Poland's 10 largest banks in terms of equity capital.

The bank will be employing a staff of 800 once the first branches are opened. Staff numbers are expected to 1,000 by the end of 2008 and to 3,500 within three years.

Alior Bank is planning to open 80 branches in Poland's 50 largest cities. These will be concentrated in 10 regions. The bank is also planning to open eight business centers. Alior Bank is aiming for a 2-4 percent market share and a customer base of around 1 million within three years. The bank's long-term aim is to open 200 branches and more than 400 agencies.

Alior Bank will be a universal bank offering retail and corporate banking services in all market segments.

Other banks in Poland are also determined to expand. According to a study by the Profit company, commissioned by Własny Biznes Franchising monthly, Poland's banks opened more than 250 new franchise branches in the first half of this year. BPH opened 89 such outlets during this time; Getin Bank launched 68; and GE Money Bank set up 46. At the end of June, there were 3,303 banking franchises in Poland, with banks declaring an intention to launch a further 577 such outlets by the end of the year.

At present 13 banks in Poland offer licenses to businesspeople to operate franchises-either under the bank's own logo or as a separate brand. They include AIG, BPH, BZWBK (the Minibank brand), Bank DnB Nord (the Monetia network), Dominet Bank (Fortis Group), Eurobank, GE Money Bank, Getin Bank, ING, Multibank, Bank Pekao SA, Bank PKO BP, and Polbank.
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