BAU for Polish custody businesses after RBI/BNP Paribas Polish deal

Raiffeisen Bank International is to sell its core banking operations in Poland to BNP Paribas S.A, however it seems unlikely to have a significant impact on the custody clients of the two banks.

By Joe Parsons
The announcement that Raiffeisen Bank International AG (RBI) is to sell the core banking operations of Raiffeisen Bank Polska S.A. to Bank BGZ BNP Paribas S.A., a subsidiary of BNP Paribas S.A. seems unlikely to have a significant impact on the custody clients of the two banks, given the way that they have organised the delivery of services.

The transaction is expected to close in the fourth quarter of 2018 subject to regulatory approvals. According to BNP Paribas, the Core Bank consists of the business of Raiffeisen Bank Polska, excluding the foreign currency retail mortgage loan portfolio and a limited number of other assets. RBI intends to transfer these operations to a Polish branch of RBI to be established.

“With new cross selling opportunities,” said the bank, “the transaction will enhance the position of all the other BNP Paribas Group subsidiaries operating in Poland,” including BNP Paribas Securities Services.

Both BNP Paribas and RBI were rated providers in Poland in last year’s Agent Banks in Major Market’s survey, conducted annually by Global Custodian. However, RBI’s custody service model for the region involves Raiffeisen Bank International AG, the Austrian entity, being a direct participant in the various CSDs of Central and Eastern Europe. In line with this, RBI is a direct participant at KDPW, the Polish CSD, and provides custody and settlement services for Polish securities directly out of Vienna without the intermediation of its Polish subsidiary.

According to the bank, this will not change under the new set up, irrespective of the future of Raiffeisen Bank Poland. “We remain fully committed to servicing the Polish market and our clients will not feel any change in services as a result of a sale of our Polish subsidiary,” said an RBI spokesperson. “All services are performed by our multinational CEE team based in Vienna – this applies both to Operations and Relationship Management.”

“We are glad to become with this transaction an active participant in the consolidation of the Polish banking sector,” said Przemek Gdanski CEO of BGZ BNPP. Nevertheless, Poland’s custody market remains somewhat crowded with 10 banks receiving entries in the 2017 Global Custodian ABEM survey, six of which merited individual write-ups, including both BNP Paribas and RBI. The country’s aggregate score has improved from 2016, up 16 basis points to 5.54 out of a possible 7.00, above the global emerging market average

BNP Paribas recorded an overall 6.07 with all scores in the high five and six range. After missing out on a write up in 2016, RBI meanwhile recorded an aggregate 5.98, ranging at a category level between 5.50 to 6.38. Ancillary Services, its biggest scorer, is 0.96 points above the global average.