GE Money announced that it has closed the transaction to buy Poland’s BPH Bank, once the country’s third-largest, but now barely making it into the Top Ten there. In its glory days, BPH was the subsidiary of Germany’s HVB, and acquired a reputation for good customer service and fast growth. When Italy’s UniCredit bought HVB in 2005, BPH was partially merged with UniCredit’s Polish bank, Pekao, the country’s second-largest bank, taking the corporate banking, investment funds, stock broking divisions.
Having lost many of its best employees, large parts of its most lucrative businesses, and several hundred branches, BPH was still an attractive target for GE Money, which was looking to expand in the Polish market. GE Money paid about €625 million ($970 million) for BPH, not a lot for a Polish bank, and plans to invest an additional $50 million this year, with a total of $150 million to be invested over the next few years. Polish regulators approved the sale of BPH this month, and the two banks should merge next year. The new bank will be headed by Jozef Wancer, who originally helped build BPH into one of the country’s largest banks. A priority will be to re-establish the bank’s corporate banking. In December, BPH had no corporate customers, now it has 600, said Mr Wancer. By the end of the year, he hopes to double that. The goal is for the bank to climb back into Poland’s Top Five in five years.
The two banks’ strength is in consumer lending, where GE brings an aggressive approach to mortgage and consumer loans, while BPH has a national network, and a well-known brand. GE has a problem loan ratio of about 1.6 per cent, while BPH’s is a better-than-industry-average of 4 per cent.
“We are very bullish on the prospects of the Polish market,” said Dmitri Stockton, president and chief executive of GE Money in central and eastern Europe. “Our risk management capability is one of our strengths. It’s a key thing we have to offer.”
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