By: Grzegorz Morawski
CEOWORLD Magazine
The following Interview is brought to you by CEOWORLD Magazine.
Grzegorz Morawski- Sir, we are now celebrating the 20th anniversary of establishing the 3rd Republic of Poland. It is also an anniversary of the free market economy in Poland. Do you think that our banking sector is falling behind in comparison to Western countries?
Jan Krzysztof Bielecki- The Polish banking sector has two main features. On the one hand it has been strongly privatized and modernized within the last ten years, on the other hand it is closely connected with huge, international banking groups. As far as investment banking is concerned, we are rather at the medium development stage. These factors make our banking sector’s situation quite good, if we look at the scale of nowadays crisis.
Grzegorz Morawski- What do you mean by saying, that the investment products development is on a medium level?
Jan Krzysztof Bielecki- The instruments that have damaged the market and provoked the financial crisis, were based on the idea of leverage. That is why we are now witnessing a deleverage process. The condition of Polish banks is relatively secure, because there was no such strong leverage in Poland, as was the case in the Western economies.
It is worth taking a closer look at the policy of Bank Pekao. We did not grant 50 year mortgage loans, or loans in foreign currencies, especially Swiss franks so popular in Poland. We haven’t even developed these notorious currency options as independent instruments, they were only used as a collateral in trade transactions. That is what I mean by saying that those instruments development level was rather limited. And now we can see its positive effects.
Grzegorz Morawski- In one of the interviews you mentioned a conservative business model which was implemented in Pekao SA some years ago. What are its main features?
Jan Krzysztof Bielecki- That is exactly what being conservative in banking is about – limited leverage. A good example was using stock as a collateral for loans. When the stock exchange indices were growing rapidly, the collateral value was growing as well and you could borrow more and more.
One was driven by another, until the crisis occurred. We avoided such activities and even if we used such financial models, the collateral was few times higher than the nominal stock value. Furthermore, against the whole market, we did not lend money in different currency than the one the clients earned in. It was important for us to synchronize the cash inflows with the money needed to repay the debt later. Our procedures for examining the client’s solvency were quite rigorous, sometimes even inconvenient for the client, but effective.
Grzegorz Morawski- Weren’t you anxious, that your offer will not be competitive any more?
Jan Krzysztof Bielecki- Yes, of course. There is a price behind it. Your question shows the merit of the problem. A CEO of one of the biggest banks once said to me:
“I totally agree with you that we shouldn’t lend in Swiss franks, nor even more in Japan Yen. We have been running such a policy so far but we have to change it, because further loss of the market share is unacceptable for us”.
Grzegorz Morawski- He who laughs last laughs best?
Jan Krzysztof Bielecki- Well, there is actually nothing to be laughing at. We should stick to a certain logic in what we do. As I mentioned, cash inflows should be synchronized with the debt service outflows. That is something novice bankers are taught in the primary school!
Grzegorz Morawski- Has it come to your mind, that such a violent breakdown on the world markets can happen, when you were designing the bank’s policy?
Jan Krzysztof Bielecki- We did not know how it all might end up. The imagination however relies on knowledge. The banking sector has felt an ‘unbearable lightness of being’, if I may refer to a book by Milan Kundera. It was the result of the lack of knowledge. The history shows that similar mistakes were committed by the banks several times in the past, e.g. in Great Britain or in Argentina.
We have many examples but it seems that everyone thinks that they do not refer to him in particular. In Poland a huge part of loans were granted to customers who were not able to afford more expensive PLN loans, or wanted to have higher credit capacity to buy a bigger home. Furthermore, loans were granted for the period of even 50 years, where the maximum for mortgage loans in e.g. Austria is 15 years! We did not make this mistake at Pekao.
Grzegorz Morawski- What is the target group of the Pekao SA bank?
Jan Krzysztof Bielecki- We are the biggest bank for companies in Poland. Our portfolio is twice as large as the one of our main competitor – PKO BP, as far as services for companies are concerned. Actually every second company in Poland has business relations with us.
That is what makes us strongly connected with the Polish market and shows that we are a great and tested business partner. Obviously, we do have millions of individuals clients across the country, as well.
Grzegorz Morawski- How would you encourage foreign entrepreneurs to invest in Poland?
Jan Krzysztof Bielecki- The next year will be decisive for the shape of economic world economy map. In my opinion, some serious changes will take place. It often happens, when it comes to worldwide crises. I am sure that this change will happen in favour of Poland. This will allow us to build a stronger position of Poland in the bloodstream of the European economy
