Scandinavian Banking in Poland and the View on Poland From a Banker Egil Rindorf Head of Nordic & International Corporate Banking Poland & the Baltic States
Poland is not an isolated island, but proved to be resilient 200 180 GDP per capita (EU average = 100) % % 200 180 8 6 GDP change % % 8 6 160 160 4 4 140 120 140 120 2 2 100 80 Denmark Sweden Finland Norway 100 80 0-2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0-2 60 Poland 60-4 -4 40 40 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Eurostat -6 EU Euro area Poland Source: Eurostat -6 100 95 GDP per capita (EU average = 100) % % 100 95 140 GDP level Index, 2005=100 Index, 2005=100 140 90 85 Hungary Czech Rep. Poland 90 85 130 EU average 130 80 75 70 80 75 70 120 110 Euro area Poland 120 110 65 65 60 60 100 100 55 55 50 50 90 90 45 45 40 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 40 80 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 80 Source: Eurostat Source: Eurostat No 2
Negative external demand shock well absorbed Where do Polish exports go? Others, 33.1 Germany, 26.1 4.8 4.6 4.4 4.2 4.0 3.8 EURPLN EURPLN 4.8 4.6 4.4 4.2 4.0 3.8 Ukraine, 2.5 Hungary, 2.6 Sweden, 2.8 Netherlands, 4.4 Russia, 4.5 Italy, 5.3 France, 6.1 UK, 6.4 Czech Republic, 6.2 3.6 3.6 Source: Central Statistical Office 3.4 3.2 3.0 1Q01 3Q01 1Q02 3Q02 Actual EURPLN EURPLN at which exports are no longer profitable 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3.4 3.2 3.0 Source: National Bank of Poland No 3
No overhang of excessive private sector debt Source: Eurostat No 4
Economic activity Slowdown underway The Polish economy is slowing down amid negative impact of Euroarea recession and domestic fiscal consolidation, but Poland remains one of the resilient economies in the EU. The key reason for the slowdown is weaker external demand, although Poland benefits from not being as open economy as its regional peers and from the fact that its dominant export market is relatively strong German economy. Domestic fiscal consolidation adds to headwinds for the Polish economy, with the pinch felt particularly strongly in public investments. Weakening in investment activity is also taking place as many large infrastructure projects were finished before UEFA Euro 2012 in June. Economic slowdown is also driven by weakening in consumption growth due to elevated inflation, deterioration in labour market conditions and adjustments in households balance sheets (there is a need to rebuild savings after the savings rate has dropped to historical lows over the past few years while there is no need to reduce debt because private sector debt to GDP ratio in Poland is at one of the lowest levels in the EU being one of the strengths of the economy). In mid-2013 a recovery should start amid rebound in the Euro area, an expected responsese of domestic macroeconomic policy and gradual beginning of large investments in the energy sector (conventional power plants, wind farms, nuclear power plant, exploration of shale gas). Activity momentum weakens notably, but Poland remains growth outperformer 40 30 20 10 0-10 -20-30 -40 30 20 10 0-10 -20-30 Jan-08 Jan/08 % y/y % y/y Foreign trade turnover Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Exports Imports Oct-11 Jan-12 Apr-12 Source: GUS, Nordea Markets % y/y % y/y Economic activity indicators Apr/08 Jul/08 Oct/08 Jan/09 Apr/09 Jul/09 Oct/09 Jan/10 Apr/10 Jul/10 Oct/10 Jan/11 Apr/11 Jul/11 Oct/11 Jan/12 Industrial output Construction output Retail sales Apr/12 Source: GUS, Nordea Markets Jul/12 40 30 20 10 0-10 -20-30 -40 30 20 10 0-10 -20-30 5
The End of the World as We Know It... 6
Implications Banks should have more, not less capital Banks should have more liquidity Interest rates have been too low Reversing the above means higher financial costs This means lower, sustainable, demand for credits The global banking machine is much too big! No 7
This is permanent For the rest of our professional careers, we will have to clean up the mess and live with the lessons No 8
How Ratings Adjust Assets There is a complex formula (determined by the regulatory authorities) that takes the rating, the product and collaterals to determine how to translate your nominal loan to a risk weighted asset (loan) 9
Price Shock Good customers are used to getting good pricing and not so good expect higher pricing, but not 2-3 times higher! 10
Why Then Invest in Poland? Poland is the biggest country in Central and Eastern Europe (population 38,1 mio) Poland is in the best fiscal and financial condition among all new EU countries according to the world bank Polish employment costs are among the lowest in EU Poland ranks well above EU average in terms of quality of human resources There are many academic centers in Poland with 2 mio students Polish students have good knowledge of foreign languages (more than 50% speak fluent English) 11 Source: KPMG
Key policy areas to consider when entering Poland Risk strategy Currency strategy Non-commercial considerations CSR environmental ethical Investment considerations Organization Legal obstacles unknown law system Distribution channels Other practises and unknown bureaucracy... and more 12
Be Prepared to Change Your Plan! 13
So What is the Nordea Story? 14
Why Exactly is Nordea in Poland? To follow our clients in a growth market We sell individual value generating solutions for each customer and develop longstanding mutually beneficial cooperation Nordea is first choice to a comparatively large proportion of Nordic companies Leading Cash management partner in the Nordic region All services are harmonized with Nordea standards To capitalize on our strong industry teams 15
Long-Term Business Strategy in Poland one of the leading banks in Poland both on corporate and individual markets to offer a wide range of new banking products and services branches in selected major cities and electronic channels (e-banking, m-banking) cooperation with at least 50% of Nordic Companies operating in Poland 16
Can I borrow locally? and is it the best solution? The Nordea concept is: One-point-of-entry for every customer This means that main part of negotiation of terms and credit decision is made in Denmark by your normal contact Lending can be booked in Denmark or locally as you wish Most types of banking products are almost as they are in Denmark Local borrowing may be the best solution In order to make pledges locally for tax reasons For practical reasons It is often more bureaucratic to establish the business locally than in Denmark but day-to-day operations are normally smooth No 17
Cash Pool is Avaiable Company A (Negative Account Holder) Current account Cash pool agreement Power of attorney (for Bank) Overdraft limit of xxx PLN Company B (Positive Account Holder) (1) The Bank has a credit claim towards Company A resulting from the used part of overdraft limit granted (4) Company B becomes the real lender towards Company A and thus is entitled to receive interest payable on the credit claim (3) against payment Bank (2) The Bank sells its credit claim towards Company A to Company B... Current account Cash pool agreement Power of attorney (for Bank) 18
Corporate products Products Trade finance Markets Cash management Loans, Deposits &NF Lending/Deposits Cash Management EPF DCM E-banking Trade Finance Markets (TIP) Customer value proposition Nordea Finance Cards No 19
Can I help. 20
Egil Rindorf Head of Nordic and International Corporate Banking, Central & Eastern Europe 21
Appendix Nordea Products in Poland
Major Products Available for Corporate Clients Payments Nordea Client Funding Hedging Trade Finance Monitoring Credit Cards Cash Processing Electronic Banking Channels Nordea Accounts 23
Nordea Major Products 1 Accounts Current, Salary, Social, Escrow PLN, EUR, USD, SEK and other major curriencies Deposits Monitoring Statements in paper form Electronic statements Balance Reporting MT940 / 941/ 942 Payments Domestic: Supplier, Salary, ZUS, TAX International: Nordea Group Payments, Standard, Urgent Mass Payment Reconciliation System Direct Debit 24
Nordea Major Products 2 Electronic Banking Channels Solo Corporate software homebanking solution efirma Plus Internet homebanking solution Request for Transfer MT101 Credit Cards VISA Electron VISA Business Debit VISA Business Charge Cash Processing via branch network via outsourced companies 25
Nordea Major Products 3 Funding Short and Medium Term Loans, incl. overdraft facility Investment Loans Syndicated Loans Leasing Hedging Currency / Foreign Exchange (spot, forward, dual currency deposit) Interest Rates (forward rate agreement, interest rate swap, cross currency interest rate swap) Trade Finance Guarantees L/C etc. 26
Electronic Banking Channels 1 Solo Corporate - Off-line system - Accounts and reporting - All kinds of payments - Unlimited number of users - Unlimited number of workstations - Communication via modem or fixed line - Possible integration with ERP system (file transmission) - Both English and Polish version 27
Electronic Banking Channels 2 Solo efirma Plus - On-line system (based on Internet) - Accounts and reporting - All kinds of payments - Unlimited number of users - Well-suited for small and medium companies - Both English and Polish version 28
Other Nordea Products Direct Debit DD is an instruction given to the Bank by the Creditor for debiting the Debtor s account with a specified amount and crediting the Creditor s account with the same amount simultaneously. The Debtor has a right to withdraw from a DD at any time. DD enables more efficient realization of periodical payments. It may be applied for regular payments made by individuals as well as for fixed payments between business entities. Mass Payments Reconciliation System (MPRS) MPRS is based on the coded information about the payer in the Bank account number. A different virtual account number, including a unique personalizing identifier, is assigned to each payer. Payments are transfered to this virtual account. The Customer s current account is credited with one aggregated amount of all the payments. MPRS enables quick and unequivocal identification of the payment made by the payer and automatic booking of the received payments as well as its identification in the Customer s accounting system. 29
NORDIC CORPORATE BANKING DEPARTMENT fax: +48 22 581 33 51 Maciej Czerwonogrodzki Head of NCBD tel. +48 22 581 33 55 Danish/Swedish/International Desk Magdalena Winiarska Senior Relationship Manager tel. +48 91 432 01 28 Marzena Pietruczuk Senior Relationship Manager tel. +48 22 581 33 57 Hubert Dziedzic Senior Relationship Manager tel. +48 22 581 33 56 Jolanta Jakubiec Relationship Manager tel. +48 22 581 33 52 Cezary Jeżewski Relationship Manager tel. +48 22 581 33 68 Tomasz Błahut Relationship Manager tel. +48 22 581 3358 Finnish/Norwegian Desk Magdalena Rutkowska Senior Relationship Manager tel. +48 22 581 33 60 Kinga Gerchard Relationship Manager tel. +48 22 581 33 45 Krzysztof Bujnowski Junior Relationship Manager tel. +48 22 581 33 54 Cash Management Sylwia Czyż Head of Cash Management Unit tel. +48 22 581 33 61 Joanna Hońdo Cash Management Advisor (Danish customers) tel. +48 22 581 33 23 Aleksandra Bara Cash Management Advisor (Sw edish customers)tel. +48 22 581 33 59 Radosław Rogalski Cash Management Advisor (Finnish customers) tel. +48 22 581 33 22 E-mails: first name.surname@nordea.com 30
CORPORATE CUSTOMERS' SERVICE TEAM fax: +48 22 581 33 67 Agnieszka Owczarek Head of Customer Service Team tel. +48 22 581 32 57 Piotr Wodzyński Customer Manager tel. +48 22 581 33 64 Małgorzata Chmielewska Customer Manager tel. +48 22 581 33 65 Marzena Szarek Customer Manager tel. +48 22 581 33 63 Dariusz Drzewiecki Customer Manager tel. +48 22 581 33 62 Mariola Ardej Customer Manager tel. +48 22 581 32 52 Krzysztof Płoucha Customer Manager tel. +48 22 581 31 48 MARKETS fax: +48 22 521 36 35 Piotr Kurowski Head of Markets tel. +48 22 521 36 40 Dorota Olender Deputy Head of Markets tel. +48 22 521 36 43 Anna Solarz Sales Manager tel. +48 22 521 36 55 Dariusz Grzyb Senior Sales Manager tel. +48 22 521 36 41 Filip Moryl Junior Sales Manager Katarzyna Wierzch Senior Sales Manager tel. +48 22 521 36 42 Tomasz Bartkowski Senior Sales Manager tel. +48 22 521 36 54 E-mails: first name.surname@nordea.com 31