trending Market Intelligence /marketintelligence/en/news-insights/trending/h23Au69BiqVrkeG-vju3tg2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Commerzbank's sale of mBank set to attract 'huge interest' in Poland and beyond

StreetTalk – Episode 69: Banks left with pockets full of cash and few places to go

Street Talk – Episode 69: Banks left with pockets full of cash and few places to go

Infrastructure Issues: Tools to Dig Deep on Potential Risks

Street Talk Episode 68 - As many investors zig away from bank stocks, 2 vets in the space zag toward them


Commerzbank's sale of mBank set to attract 'huge interest' in Poland and beyond

Commerzbank AG's potential sale of its Polish subsidiary mBank SA is generating strong interest from domestic and international players attracted to the bank's technological prowess and solid client base, analysts say.

This is one of a two-part series on the Polish banking sector. For an overview of how Swiss franc mortgages are weighing on Poland's banks, click here.

Although no formal sales process has begun, plenty of lenders are showing interest in the German lender's 69% stake in mBank, which analysts value at about €2.1 billion. Potential suitors include the Polish units of European banks including BNP Paribas Bank Polska SA and Santander Bank Polska SA and Polish lenders Bank Pekao SA or PKO Bank Polski SA.

"It will be a crowded call because the core assets of mBank are very attractive," Kamil Stolarski, head of equity research at Santander Bank Polska, told S&P Global Market Intelligence. "mBank is technologically advanced and is quite agile."

The lender has a strong footing in both retail and corporate banking, boosted by its position as Poland's leading online bank and its small branch network at a time when traditional lenders are cutting branches in favor of digitization, said Łukasz Jańczak, an analyst at Ipopema Securities in Warsaw. All these factors mean that Polish lenders, foreign banks already present on the local market and international players without a foothold in the Polish market will be looking at the sale.

SNL Image

"There will be huge interest in mBank. It is a very good franchise, very good brand, [and has] very good transactional clients with decent credit quality," Stolarski said.

Indeed, mBank is one of the most profitable units of Commerzbank, which is planning to sell it to finance a restructuring plan as it seeks to retrench to the German market.

An offshoot of Bank Rozwoju Eksportu, mBank is Poland's fourth-largest bank by total assets, according to S&P Global Market Intelligence data. The lender's first-half net interest income rose 27.4% to 1.93 billion złotys, while its net interest margin stood at 2.65% at the end of June, up from 2.36% at the end of the first half of 2017.

Swiss franc mortgages portfolio

A potential obstacle to a deal could be the bank's foreign exchange mortgage portfolio. Europe's top court recently sided with borrowers on the question of forex mortgages. This means that banks may be liable for repaying billions of złotys to borrowers who took out Swiss franc-denominated home loans to take advantage of low rates before the 2008 financial crisis, but were left exposed when Switzerland unpegged its currency from the euro in early 2015, triggering an almost instant 40% appreciation.

Since the Oct. 3 ruling, there is uncertainty over how it will affect the banking market, given that Polish courts will give final judgments on cases, and the total cost to the sector is unclear, with estimates ranging from 17 billion to 60 billion złotys.

One of the Polish lenders most exposed to Swiss franc mortgages, mBank's foreign exchange portfolio as a percentage of its loan book stands at 15.91%, according to S&P Global Market Intelligence data. The European Court of Justice ruling, however, does not apply to all foreign exchange loans.

SNL Image

Commerzbank could decide to keep the forex mortgage risk on its balance sheet, said Gunter Deuber, head of economics, fixed-income and foreign exchange research at Raiffeisen Bank International. But in that case, it may not get the price it wants, he said.

"I have the feeling they would prefer to sell the whole risk and the whole bank if possible, but for this they need more clarity," he said.

The bank's price-to-book value has fallen to 116.1% at the end of the first half, compared to 143.10% at the end of the first half of 2017.

Past deals, potential buyers

Forex mortgages exposure may not make a deal more difficult as similar transactions have closed in the past, Stolarski said.

Santander's Polish operations acquired the retail and private banking operations of Deutsche Bank Polska SA in 2018, but Deutsche kept the forex mortgage risk. Société Générale SA sold its retail banking subsidiary to Bank Millennium SA, and the deal included a risk-sharing agreement for forex mortgages. Meanwhile, BNP Paribas SA in 2018 acquired the core banking operations of Raiffeisen Bank International AG, but Raiffeisen kept the forex mortgage portfolio.

Given that Santander and BNP Paribas both recently increased their presence in Poland, they would be the most logical buyers, Deuber said.

But Jańczak said a deal with a local player could create greater cost savings through merging mBank with their existing operations. A state-owned bank such as Pekao or PKO could be interested, and this would be in line with government policy to increase the share of Polish ownership in the banking sector.

After elections in 2015, the Law and Justice party-led government sought to "repolonize" banks by increasing domestic ownership over a sector that was previously 60% foreign-owned. That policy has now brought foreign ownership to less than 50%. State entities now have stakes in Alior Bank SA, Pekao and PKO.

SNL Image

As of Oct. 22, US$1 was equivalent to 3.83 Polish złotys.