Q: Poland has started to carry out a programme of large investment projects funded from public sources and this process is coupled with a revival in investment funded from private money. Does Deutsche Bank take part in arranging funding for these projects? Could you give us some examples?
A: Deutsche Bank Polska is part of the globally operating Deutsche Bank Group, which is very active in providing funding for different public infrastructure projects. In our work, we rely on the experience and standards of the whole group, especially its Western European arm, as much as the market situation and local regulations allow, and as much as the Polish market needs.
We have the expertise and are fully prepared to structure and arrange financing packages for any kind of public projects which are strategically important and economically justified. Deutsche Bank Polska is always ready to undertake such a task and offer optimal and well-tried solutions. We have the means and the ability to do so.
Many infrastructure projects - national, regional or local - are now underway in Poland. They are partially funded from European Union sources. In each case, EU funding has to be complemented by funding from national sources, either public or private. Deutsche Bank assists in arranging this complementary funding.
I wish to stress that when taking a decision whether or not to get involved in a project we take into account not only its financial scale but also how well it is prepared for implementation. Our experience shows that the number one problem is not to acquire funding but to struggle through all the necessary legal and technical procedures, especially within a public procurement process.
Of course we have many experiences of effective work with companies and public institutions. For example, we have arranged funding for PKP SA Group (Polish State Railways). Until recently the Group has mainly used loans guaranteed by the government. But this year Deutsche Bank prepared a financing structure for PKP SA and attracted a suitable group of investors. As a result, PKP SA was able for the first time to acquire funding on its own, without putting a burden on the national budget, something which opened a new chapter in the company’s activity. Deutsche Bank is also preparing a euro bond issue for the city of Warsaw. It is a new step in the Bank’s activity and a good example of its involvement in the public municipal sector. It is still an open question to what extent the city will use the bonds but the most important thing is that Warsaw’s municipal bond issue will be offered on the European market.
Q: For more than a year now there has been turbulence on capital markets across the world. Is Deutsche Bank contributing to stabilising the Polish capital market through its presence and activity in Poland?
A: Indeed, it is impossible not to notice the crisis, which started in the United States and is now sweeping across Europe. The bankruptcy of Lehman Brothers and sale of Merill Lynch, two legendary Wall Street institutions, is already a fact. Part of Polish financial institutions also have some troubles but luckily their troubles are related to higher costs of financing rather than being directly associated with liquidity. I personally believe that the Polish banking sector is still very sound because its exposure to the U.S. mortgage market was not high. As a result, the sector did not suffer such losses as banks in Western Europe did. Let me repeat again: even if the crisis has some impact on the Polish financial institutions it is not through a loss of liquidity or an urgent need to raise capital but through a rise in current costs of financing.
Today Polish banks have to finance their operations with external capital or improve their solvency ratio. What can Deutsche Bank Polska offer in this situation? We are a large bank with high liquidity and a sound capital structure. This enables us to take part in stabilising other banking institutions in Poland. For example, we have organised a subordinated bond issue for PKO BP. We are very proud of this transaction. It was the largest subordinated bond issue on the Polish market – worth PLN1.6 billion. Looking at the size of the Polish financial market, this figure is really high. We are also in talks with other banks, to which we offer senior debt or subordinated debt financing. We try to adjust the amounts and forms of financing in the most optimal way from the point of view of local banking institutions and investors.
Q: 2008 is likely to be a third excellent year in a row for banks operating on the Polish financial market. What activities have helped Deutsche Bank Polska to achieve its excellent results?
A: Most Polish analysts are right. The Polish banking sector has indeed shown record results, although the slowdown on the real estate market has had its adverse impact on this sector as well. But the turbulence on international markets has not undermined the dynamism of Polish banks. We have to remember, however, that these record results are largely due to activity in the retail segment, which still shows the largest potential for growth in Poland.
Deutsche Bank Polska is mainly oriented at work with the government sector and corporate clients, considering their great needs associated with the Euro 2012 football tournament and projects partially funded by the European Union. EU funding stimulates the market while the challenge the Polish infrastructure sector faces is so great that the involvement of financial institutions operating on such a large scale as Deutsche Bank is indispensable. We have capital, an investor pool and one of the most advanced product platforms. This is our advantage. We estimate that in coming years the public sector’s potential for growth may be equal to the retail sector’s potential. Of course the financial market itself and infrastructure needs will certainly verify my opinion.
Deutsche Bank AG is one of the leading investment banks in the world and has a strong position in the highly profitable retail segment. With its stable leading position in Germany and across Europe, the Bank has been consistently expanding its operations in North America, Asia and on key emerging markets. The Bank has over 80,000 employees in 75 countries, which means it can offer highest quality financial services to clients across the world. Deutsche Bank’s goal is to achieve the position of the world’s best provider of financial solutions for demanding clients, creating at the same time a unique value for its shareholders and employees.
Deutsche Bank Polska SA started operations in Poland in 1995. Deutsche Bank Group in Poland also includes Deutsche Bank PBC SA, DB Securities SA, DWS Polska TFI SA, DIL Polska Baumanagement Sp. z o.o., DIL Polska Real Estate Leasing Sp. z o.o., DB Real Estate Polska Sp. z o.o. and Arx Equity Partners Sp. z o.o. The companies employ over 2,000 people in Poland. Deutsche Bank Group specialists and advisors offer clients a full range of professional, modern services adjusted to dynamic changes taking place in the economy and the world of finance.