According to today’s daily Rzeczpospolita, the preliminary offers for Bank BPH-200 are to be submitted by 13 December and the short list should be available before year end. The information memorandum was sent to 20 potential investors. According to Luigi Lovagio, quoted by the daily, the buyer should be selected in the first 4 months of 2007 and the transaction finalized in the third quarter. The daily quotes anonymous analysts stating that the interest in Bank BPH-200 could be lower than initially expected due to (i) relative small size – below top 10 in Poland for total assets (ii) lack of corporate clients which are to be transferred to Pekao (iii) costs, too high for the asset base. According to the daily the price for Bank BPH-200, given the big interest in the CEE banking assets, could be at minimum 3.5-4x book value.
Our view: Bank BPH-200 was allocated, from Bank BPH, 15.0% of loans, 13.1% of deposits, and 22.8% of equity and is therefore considered to be overcapitalised. At the same time, the reported pro forma profitability indicators for 9M06, a high cost/income ratio of 85% and revenues of PLN 600m suggest a low ROE. At the same time, the scarcity of CEE assets and the high level of interest in the latest international transactions suggest that Bank BPH 200 may attract a high price multiple, despite its lack of profitability in its current form. In addition to the 200 branches, UniCredito is spinning off sufficient infrastructure for a universal bank to provide services in all banking segments (IT needed to support retail activity and corporate system transactions, ATMs, call centre), as well as a mutual fund company and head office (back office functions). Such assets may prove particularly attractive to ambitious players that currently have no presence in Poland. Of course, an acquirer with an established Polish presence would see such centralised infrastructure as a source of overlap and area to eliminate costs. On this basis, we would not be surprised to see an offer in line with the rumoured 3-4x book value.