Fear stalks Warsaw investment banking industry

By bne IntelliNews October 2, 2012

bne -

Largely unaffected by the financial meltdown in 2009, Warsaw's investment banking industry is rife with fear that the global slowdown and an end to the golden age of privatisation in the country will put unbearable pressure on the gaggle of brokers feeding off Central Europe's biggest exchange.

According to Reuters, brokerage houses in Warsaw are scaling back operations and in some cases could leave altogether because the boom in stock market listings that helped them escape the chaos in other financial hubs in recent years is fizzling out.

Market insiders say the reality of the slowdown is finally catching up in the Polish capital. That's despite the government's continued push on privatisation, with a PLN10bn programme both last year and this. However, with Poland having been the only EU country to escape recession in 2009, and finally looking ready to take its rightful place at the head of the CE table since, Warsaw has increasingly been seeking the premiums available from strategic investors for state assets.

At the same time, with a lid still on risk appetite, turnover on the stocks from various smaller and less developed markets that the Warsaw Stock Exchange has been capturing has slowed also. It has a large number of listings from Ukraine for instance, but as as bne reported recently, Russian investment banks are abandoning Kyiv in droves.

Last year, the Warsaw bourse saw 38 IPOs worth a total of PLN8.5bn; in 2012 just 13 listings - worth no more than PLN2bn - are anticipated. The WSE now faces more delistings than IPOs, Reuters claims, and joint turnover had tumbled by over a quarter in the year to August, to total PLN139.4bn.

In short, the state has few choice assets left to privatize, and with the global recovery still too uncertain to pick up the slack, the volume of businesses being handled by Warsaw's brokers has slumped. In the good times, almost 2,600 licensed brokers and 1,300 other financial advisers were touting for business in the Polish capital.

Today, 56 brokerage houses remain, and among those already trimming operations are Wood&Co. and Credit Suisse. Deutsche Bank has also announced cuts, and the newswires claims it could be one of the hardest hit. "I would not be surprised if Deutsche Bank Securities were left with half of its current staff," an unnamed source said.

Meanwhile, Dutch-based giant ING said on October 1 that it plans to will eliminate about 130 jobs - mostly in Russia, Hungary, the Czech Republic and Romania - as it closes its wider emerging European equities operation, to focus on Belgium, the Netherlands and Poland, where it operates local unit ING Bank Slaski.

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