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Poland's largest banking group benefits from EBRD financing
The European Bank for Reconstruction and Development (EBRD) is continuing to support the development of Poland's financial sector by taking a US$ 100 million (ECU 91 million) equity investment in Bank Pekao S.A.-Grupa Pekao S.A. (PEKAO). The subscription to newly issued ordinary shares represents 5.3 per cent of PEKAO's enlarged capital. This increase follows the combined offering of 15 per cent of PEKAO's shares to domestic and international investors. PEKAO will be listed as of 30 June on the Warsaw Stock Exchange.
"This equity investment in PEKAO and the associated support provided to its privatisation will play a key role in continuing the bank privatisation process and improving the level of financial services available in Poland", said Kurt Geiger, Co-Director of the EBRD's Financial Institutions team.
Maria Wisniewska, President of the Management Board at PEKAO, said that the proceeds of the capital increase will be used to finance expected growth in the bank's interest-earning assets and investments in technology, and modernisation of PEKAO's organisation. The confidence shown to PEKAO by such a renowned investor is, according to Mrs Wisniewska, further proof that the bank's strategy is on track, and that it is increasingly attractive to present and future shareholders.
PEKAO's primary business is the provision of commercial banking services, including lending and deposit-taking, to large corporations and small and medium-sized enterprises. PEKAO's management has decided to merge fully the three regional banks which were absorbed into PEKAO by a government decision in 1996. This strategy will strengthen PEKAO's position in the Polish banking sector and is expected to increase operating efficiency and result in better shareholder value. This process is expected to be completed by the end of this year. As at 31 December 1997, PEKAO had 24,920 employees based in 564 branches in Poland and 10 in cities worldwide, including Berlin, New York, Paris and Tel Aviv.
The EBRD has played a major role in supporting the development of an efficient and competitive privately owned financial services sector in its countries of operations. To date it has made over 50 equity investments in banks in 20 countries, totalling over ECU 450 million. It places particular emphasis on privatisation and the promotion of good business practices and corporate governance principles in its investments.
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