The EBRD’s long relationship with Bank Zachodni WBK

By Axel  Reiserer

When the EBRD signed its first loan agreement with Wielkopolski Bank Kredytowy S.A. (WBK) in 1991, nobody could have foreseen that the relationship would last until today. Indeed, the relationship’s history illustrates how the banking sector in Poland and beyond has developed over the years and serves as a shining example of the EBRD’s contribution to the wider region.

It all started with a $50 million loan to Poznań-based WBK for the provision of loans to local district heating companies in 1991. The rapid growth of the Polish economy in the early 1990s as the country was going through a radical transformation started to attract foreign investors and Allied Irish Banks (AIB) in 1993 acquired a minority stake in WBK with the EBRD and the IFC also becoming shareholders. It was one of the first Polish bank privatisations and public offerings on the Warsaw Stock Exchange.

By 1997 AIB had raised its stake to 60 per cent. In the following years WBK underwent a comprehensive restructuring and reorganisation. In 1999 AIB bought Bank Zachodni and merged it with WBK in 2001 to create Bank Zachodni WBK or “BZ WBK”.

The new entity had to be restructured and rationalised to reduce costs, bring standards up to Western European levels and increase returns as competitive activity intensified on the Polish market.

In the following years BZ WBK’s performance was typical of Poland’s rapid development and increasing integration into the global economy at the beginning of the century. However, when the global economic crisis struck in 2008 the Irish economy was hit particularly hard.

While BZ WBK remained solid, as the subsidiary of an Irish institution, the bank could no longer rely on raising capital in the market or support from the parent. In this increasingly difficult environment, EBRD loans to BZ WBK subsidiaries for on-lending to small and micro enterprises followed by an investment in the subordinated bond of BZ WBK were important contributions to the bank’s stability.

This was followed by a new EBRD equity investment one year after AIB withdrew from BZ WBK and Banco Santander became the new majority owner in 2011. With the consecutive acquisition of Kredyt Bank in 2013 BZ WBK became the third largest bank in Poland in terms of assets, loan portfolio and deposits.

The EBRD was later invited to participate in a non-public offer of a senior bond issued by BZ WBK to institutional investors in Poland in December 2013. This latter investment was a part of the new regional initiative set up by the EBRD with the aim of developing the local currency bond capital markets in its countries of operations.

“Nothing can better prove the success of Bank Zachodni WBK’s cooperation with the EBRD than the long-term relationship between our two institutions,” said Mateusz Morawiecki, the CEO of Bank Zachodni WBK.

“Not only has the EBRD accompanied BZ WBK in the major steps of our development process for more than two decades now – but, above all, the financial support BZ WBK received from the EBRD was essential for the accomplishment of many of our strategic projects, including the merger with Kredyt Bank in 2013.

“Beyond the financial support, BZ WBK could also always count on the EBRD’s professional and comprehensive approach to projects.”