Nordea Bank Polska, Raiffeisen Bank Polska, WestLB Bank Polska, and NordLB Polska, among others, all look poised to pursue more aggressive banking strategies - the most important part of which, analysts note, is procuring new lending business from small local enterprises.
By working with these mid-size banks, small companies get 'special treatment' in terms of credit needs that larger lenders, such as the state-owned PKO BP or Citibank Handlowy, might not see as profitable enough to provide.
Watching this market slowly develop, Marcin Materna, analyst at Bank Millennium, said that while larger banks pay lip service to small enterprises, their actions often come up short, compared to the wider range of niche services other banks provide.
"This market is growing," Materna says. "The larger banks are saying that they are interested in smaller companies." Actually, though, it's the smaller banks that are better suited to the smaller enterprises. Small banks, he continues, such as Nordea or Raiffeisen, covet small enterprises as customers in the same way larger banks do larger, very active borrowers, where a small company might be ignored in the face of another more profitable customer. Not so much at mid-tier banks.
Relatively new entrant NordLB Polska is eager to participate in various loan syndications on larger deals, but its main target is smaller enterprises. In that sector, its executives believe they can offer services better tailored to its clients than can larger competitors.
Zbigniew Karwowski, member of the management board, is adamant about the bank's advantages in winning the business of smaller companies, which are considered key pilots of the nation's GDP growth. "We are a niche player," he says, acknowledging that NordLB won't be able to crack into the marquee client base of big name banks. "But we would like to be open to all corporate needs in Poland, but be more flexible than the larger players."
Flexibility, he says, defines the niche. That's why he is hard pressed to define what would be the central product that would lure customers to NordLB. "We will be more aggressive, more active," he says. "We will go into the market and we will find customers."
He also explains how the market has changed, becoming more modern in a banking sector that has recently milked a hangover from its one-time lenient lending practices.
"Classical lending is past," he says. This type of lending, also called 'straight lending,' he describes as launching credit facilities for general operations, rather than a more specific use of income. "You need much more structured finance," he points out. "We think that modern companies need to use lots of different instruments."
In this environment, NordLB, only a year and a half on the market, expects to have about zł.1.8 billion (E375 million) in assets by the end of this year - twice as much as in 2003.
Bank executives base this optimistic forecast on its diligent tracking of clients, in addition to a surge in credit needs among companies in a new EU member state.
At the same time, other mid-size banks are homing in on the country, which, with an improved climate for mortgages and better confidence from investors, has been stabilizing of late.
Nordea, concluding its recent merger with LG Petro Bank, expects to record a profit this year and to become one of the five largest retail banks in three years. Last year, the bank recorded a net loss of zł.10.9 million (E2.3 million). Similarly, following a general industry trend, Nordea is looking to boost its share of the mortgage market from 2.4 to 2.6 percent. The bank expects to tackle the market servicing Scandinavian clients, local governments, high-net-worth individuals and large companies.
Though not sure how well Nordea will be able to compete on some of the larger deals, Millennium's Materna says, it should be able to cater to smaller companies that may be cold-shouldered by larger institutions.
Yet analysts and bankers note that this does not mean that large banks are about to fall victim to the aggressive pursuits of mid-tier banks. Already with hefty corporate credit businesses, big banks have been beefing up their retail departments. BRE, for one, has so far successfully centered its attention on retail customers, whereas in the recent past it had focused on investment banking business - a cyclical business that has in the past weighed on its balance sheet. Likewise, PKO BP, Pekao SA and Citibank Handlowy have all pursued similar paths.
Timothy Sifert
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