Poland’s strong economic performance and stable financial and political environment1 have prompted a wave of new entrants into the country’s retail-banking sector during the past few years (Exhibit 1). The newcomers have pursued strategies ranging from acquiring incumbent regional and national Polish banks to launching greenfield operations independently or with partner banks. Early evidence indicates that retail operations started from scratch have attracted the greatest number of new customers (Exhibit 2).
Bank Handlowy, for example, opened the first of its branches in September 1998. By June 2000, Handlobank, its retail subsidiary, had 59 branches across Poland and more than 115,000 customers. BIG Bank Gdanski (BBG) and Banco Comercial Português (BCP), through their Millennium Bank joint venture, have opened more than 130 branches, with an estimated 150,000 customers, in less than two years.2
Since 1997, the stock market performance of Bank Handlowy and BBG has far surpassed that of other banks with large retail operations. Both banks have recently been targets of takeover attempts: Citibank managed to acquire 66 percent of Bank Handlowy for $725 million; Deutsche Bank eventually relinquished its stake in BBG to BCP.
From the outset, the acquirers of incumbent banks faced a number of...