PKO Bank Polski embarks on international expansion

Poland’s biggest bank is embarking on its first international expansion as part of a wider push by the country’s largest businesses to build on its rising global reputation.

PKO Bank Polski (PKO), the country’s largest bank by assets and deposits, will begin conducting business in Germany, France, the UK and Czech Republic in the next two years as it follows its big domestic clients outside the country’s borders.

“It is natural to support Polish expansion abroad,” Zbigniew Jagiello, PKO president, told the Financial Times. “We should go hand in hand with our clients.

“Without a global position, you are under pressure . . . Multinationals are more profitable, it is obvious.”

Since it joined the EU in 2004, Poland has more than doubled its gross domestic product, and its big businesses have gorged on rising domestic demand to become some of the largest in central Europe.

Now, as part of an effort by the government to encourage its national champions to diversify outside of the country, petrochemical company PKN Orlen, miner KGMH and fertiliser conglomerate Grupa Azoty have all made big international purchases and investments in recent years.

Foreign direct investment by Polish businesses totalled $55bn last year, 16 times more than in 2004, according to the UN trade agency, while 39 per cent of the country’s companies said profits from foreign operations had risen this year, up from 34 per cent in 2013, according to a survey by Poland Go Global, a think-tank.

Mr Jagiello plans for PKO to have its first foreign branch in Frankfurt by the end of 2015, making it the first Polish bank operating in the country.

“Clients are very excited. A few of them are saying ‘Why so late?’,” he said, noting that there are an estimated 180,000 Polish-owned businesses in Germany alone.

“After this, of course we can think about executing support for Polish companies that are far from Poland — like in Africa, Asia, South America,” he said in an interview. “This is not on the table, but it’s a potential next step.”

PKO’s move is in part to reap a growing trend for Poland’s new generation of executives, entrepreneurs and companies to think globally in a break from their parents’ generation who lived under communist rule from the end of the second world war until 1989.

“The new generation, they are different. They are Europeans. They have no borders in their minds,” said Mr Jagiello. “They did not work in the communist times. They grew up in an international environment.

“They have studied abroad or practised business abroad, and they are transferring these lessons to their mother’s or father’s businesses.”