Jan Cienski in Warsaw -
For the last few years, banking in Poland was almost boring - an easy way to earn enormous profits with relatively little risk thanks to a booming real estate market, rising salaries, and easy access to international money markets. Those easy times have disappeared following the turmoil unleashed by the credit crunch, a softening in apartment prices and rising interest rates.
But one of the country's fastest growing banks, Getin, is still turning a profit and has dramatically ramped up its hunt for deposits, a way of freeing itself from dependence on international money markets. In the first six months of this year, the bank raised PLN2.9bn (€863m) in deposits, more than it had in all of last year. There was a pressing need to do so, because last year the bank's loan-to-deposit ratio was 116%, an increasing problem with the widening spreads on international debt markets and the bank's rapid loan growth, averaging more than 80% annually over the last three years.
In order to meet its goal of matching loans to deposits, the bank is drawing in deposits by offering one of the highest rates in Poland, 7% for a one-year deposit. So far, that expensive money has not had an enormous impact on the bottom line. In the first quarter of the year, Getin Holding, the bank's parent company, reported a profit of PLN128m, up 58% over the same period last year. "It wasn't an easy quarter because the situation on the stock and real estate markets," Krzysztof Rosinski, CEO of Getin Holding, said after the quarterly results were released. "However, I feel that we have managed very well."
Small and nimble
Many analysts thought that small, fast-growing banks without a large deposit base nor tied to a larger foreign parent would be most at risk when the market turned last year, but Getin has surprised in the past. Leszek Czarnecki, one of Poland's wealthiest men, bought the holding, then a little-known information technology company, in 2002 for PLN0.76 a share. The holding's market capitalization was then about €3m.
In 2004, Czarnecki bought a small bank and folded it into the holding. He used it as a vehicle to push aggressively into consumer and car loans and mortgages at a time when Poland had just entered the EU and the real estate and banking markets were booming. With a share price of about PLN10, the holding now has a market value of about €2.4bn.
Warsaw was swept by rumours last year that Czarnecki was planning to sell his stake to an outside investor, perhaps Spain's La Caixa. Czarnecki now says that he is not getting out, but the rumour was given credibility because of his earlier extremely lucrative exit from his leasing company, Polski Fundusz Leasingowy (PFL), which he sold for €412m to Credit Agricole.
He started the fund in 1991, just after the collapse of communism in Poland in 1989. At the time, the economist was a commercial diver, and he noticed that it was extremely difficult to get his hands on needed equipment like cars and trucks. Leasing was unknown in Poland, and PFL's offer was snatched up by the number of companies trying to make their way during the first years of capitalism. By 2000, PFL's revenues were €445m and it had become an attractive takeover target.
With Getin, Czarnecki has created an umbrella of financial service companies besides the bank, including insurance, financial advice, a private bank and a mortgage brokerage. It has also expanded to the east, starting a car leasing company in Russia, as well as buying banks in Ukraine and Belarus. Czarnecki also owns LC, a construction company that's building one of the tallest residential buildings in Europe in his native Wroclaw.
Czarnecki, an adrenaline junky who once considered paying for a flight into space and still hobby dives to bone crushing depths, may have been bored last year when the challenges of running a bank seemed limited. In today's banking environment, the money is a lot more difficult to come by, the risks are a lot higher, and a man like Czarnecki may just need to prove he still has Poland's most golden touch.
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