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Business in Poland

Law, tax and banking. Chapter 6

6.1.5. Leading Banks

As the largest banking market in Central Europe, Poland has attracted numerous foreign investors. As a result, foreign or foreign-owned banks account for a sig- nificant proportion of the banking sector in Poland. In 2004, at least 67% of the total assets of Poland s banking sector and nine of the ten largest banks in Po- land were controlled by non-Polish shareholders. At the end of 2004, there were 13 domestic commercial banks (out of total 54) with majority Polish equity. This group included 5 banks controlled by the Treasury (2 out of them directly). The state-owned PKO Bank Polski S.A. is the only major institution still under Polish majority ownership (it is the country s largest bank in terms of total assets, ahead of the foreign-owned Pekao S.A. a part of the Italian Unicredito Group).

Given the fragmented nature of the Polish banking sector, consolidation is inevi- table, especially now when the privatisation process is coming to an end. As 75% of the commercial banking sector in Poland is owned by foreign investors, mergers of Western European financial institutions force their Polish subsidiar- ies to merge as well. A prime example of this situation is the recent acquisition of German HypoVereinsbank by Italian group Unicredito. As a consequence of this transaction HypoVereinsbank s subsidiary in Poland, Bank BPH (already be- ing a result of the merger between Powszechny Bank Kredytowy and Bank Przemyslowo- Handlowy) will be merged with Pekao SA, an institution controlled by Unicredito Group, subject to approval by the Polish authorities

Several Scandinavian banks have established a presence in Poland as part of their pan-regional coverage. Among them are Danske Bank, Nordea, the SEB group (still as a minority shareholder in BO Bank S.A.) and Svenska Handels- banken. A newly created joint-venture of German NordLB and DnB NOR (49% and 51% of shares, respectively) is planned to commence its operations in Po- land in January, 2006.

Leading Polish Banks

Total Assets end of 1H2005 (PLN m)

Equity end of 1H2005 (PLN m)

86,685 60,159 58,024 37,771 35,220 30,674 28,048 21,425 20,995

7,862 6,867 6,027 2,867 5,035 2,114 2,802 1,794 2,202

At the end of 2004 the ten largest banks in Poland held 71.9% of total banking sector assets and had taken 78.7% of total deposits form non-financial custom- ers. Despite the drop in total number of banks, the level of concentration lowered in recent years. This situation is related to small and medium-sized banks ex- panding much more swiftly than large ones.

Bank

PKO Bank Polski Bank Pekao Bank BPH ING Bank Slaski Bank Handlowy w Warszawie BRE Bank Bank Zachodni WBK Bank Millennium Kredyt Bank

Danske Bank / KPMG / Mazanti-Andersen, Korsø Jensen & Partnere January 2006

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