"These two consolidations clearly show, beyond a shadow of a doubt, that the building of a center of exchange in Warsaw is now all the more vital. We must pursue the program outlined in Agenda Warsaw City 2010. The process of privatization must be addressed now, to promote Warsaw as a financial center of Europe," urged Dr. Wiesław Rozłucki, president of the WSE, during a bi-weekly press conference last Thursday. "It will help our economy. Firms who are based here will benefit. Our economy must be given a chance to survive in the EU. WSE privatization is necessary for this," he added.
In an ever increasingly globalized economy, strategic alliances are the standard, as they bring benefits of economies of scale as well as access to larger markets. In this vein, Warsaw has been looking for ways to expand, one of which was its failed attempt with partner Euronext to purchase the Lithuanian bourse last month. The main reason cited for this defeat was simply that Vilnius "couldn't imagine being re-nationalized," Dr. Piotr Szeliga, executive vice-president of the WSE, told the Business Journal last Tuesday. He went on to ask, "Who owns the WSE anyway? If there's unclear ownership, especially in an unstable political environment, it's difficult to conduct business."
The WSE might itself be a takeover target for OMHEX, which now owns 90 percent of shares in the Lithuanian bourse. OMHEX is a Swedish firm that controls the stock exchanges of Stockholm, Helsinki, Riga, and Tallinn, and this transaction brings the company one step closer to its goal of a fully integrated securities market for the Nordic and Baltic region. This goal will be closer to realization when the exchanges in Finland, Estonia and Latvia migrate later this year to the same trading system that the Stockholm Stock Exchange, along with the bourses in Copenhagen, Oslo and Reykjavik, currently use.
Although Poland lies within the geographical location envisioned by OMHEX's expansion plans, need the WSE fear another Vasa invasion? Hardly, as Anna Rasin, vice-president of marketing and communications for OMHEX, assures: "We have no other plans for any other exchanges or CSDs at the moment. I do not want to support any speculation about us entering any other market," she told the Parkiet daily in response to speculation in that paper that OMHEX was closely watching the WSE's privatization with a mind to adding it to its stable.
Can Warsaw, alone, hope to go head-to-head against the much bigger and more established markets in the West, such as London, Frankfurt, and Euronext (comprising Amsterdam, Brussels, Paris and Lisbon)?
"Yes," answers Tomasz Bardziłowksi, Head of Equity Reasearch at Dom Maklerski BZ WBK. "It is the center of Europe; the market is large and growing, with an established investor base. With pension funds and investment funds, the WSE could possibly become the largest in the region." He also sees the possibility of more foreign firms, such as Raiffeisen or MOL, listing on the WSE, as BACA did recently, in order to gain access to the Polish investor base.
"It's a good sign that we can survive alone, but it's not an optimal solution. An optimal solution would be part of a wider European network," opined Rozłucki, president of the WSE, in an interview with the Business Journal prior to the press conference. "These two things - strategic alliance and privatization - go together. Not simultaneously, but in parallel."
"My idea is not to make Warsaw the only financial center in this part of the world. I don't regard Budapest and Vienna as a hostile venture to us. I think if small exchanges in this part of the world - and we are all small exchanges (Vienna, Budapest, Warsaw) - find a business case for doing something together, definitely I will support it."
Michael Dunagin
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