As part of Deutsche Bank’s efforts to offload non-core operations in order to free up funds for rigid new banking regulations, Europe’s largest banking house is looking to sell its Polish wing, Deutsche Bank Polska, according to several inside sources close to the bank.
The Polish sale could be just the first of many overseas deals in the next two years, as CEO John Cryan continues to streamline the firm and boost the company’s base money.
Deutsche would not be the first foreign bank to exit Poland in recent years, as the government attempts to encourage Polish ownership of the nation’s financial institutions.
Two separate sources confirmed that the Polish unit of Deutsche was up for sale towards the end of last week. The public relations department at Deutsche did not answer phone calls or emails relating to the news.
Deutsche Bank Polska’s profits have taken a dip in the past 12 months as rock bottom interest rates and stronger competition from local banks resulted in reduced revenue. It currently sits as the nation’s 10th largest bank.
“I’m not sure how easy it’s going to be to find a buyer as most of Deutsche’s assets are held in Swiss franc and euro currency loans,” said Anthony Russell, Senior Vice President at Monex BMO Securities in an article for Reuters on Thursday. “Any potential buyer would need to take a close look at sector regulations to see if mortgages in those currencies can be bought with the unit. Certainly if you stripped away the mortgages from the operation, there wouldn’t be much left.”
Recent history certainly doesn’t favour a Deutsche sale of the unit, as the nation’s watchdogs have so far insisted that foreign banks exiting the country keep hold of any obligations they hold that involve overseas currencies. Poland, like the UK, chose not to adopt the euro when it joined the E.U. in 2004. Foreign currency loans on Deutsche Polska’s portfolio currently total over $3 billion in euros and Swiss francs.
One local lender who might be interested in purchasing the unit is Alior bank, who recently purchased the Polish section of GE Money, who quickly exited the country after court proceedings involving alleged improper use of funds.
Other big players in the Polish financial community, such as state-owned entities, are likely to put in bids also. The government’s ruling party has been creating initiatives focused on putting more financial power in the hands of the local population.
