bank, Access Ltd. Générale de Banque concentrated on looking at financial institutions with net assets worth between $10 million and $70 million, i.e. Poland s number 19 to number 51-ranked banks. By December 1996 three potential targets had been identi- fied: Bank Ochrony Srodowiska (BOS), Bank Inicjatyw Spoleczno-Ekonomicznych (BISE) and Pierwszy Polsko-Amerykansski Bank (PPAB). Générale de Banque senior manage- ment rapidly came to the conclusion that PPAB, which enjoyed a good reputation on the interbank market, would be the perfect instrument through which to set up in Poland. It was a medium-sized bank ranked 35th on the Polish market with a network of seven branches and 21 loan production offices (LPOs) covering the whole country. It employed 300 staff and its Return on Equity currently stood at 23%.

PPAB was still a very new bank. It had been established in 1990 during the entrepre- neurial tidal wave that followed the fall from power of the Communists, under the name Krakow Banking Society, on the initiative of the Krakow Industrial Society and the Indus- trial Development Agency (IDA), a Polish State fund which was seeking to stimulate the financing of new companies in Krakow, Poland s third largest city.

In 1991, when the Polish-American Enterprise Fund (PAEF) became a strategic share- holder, the name was changed to Pierwszy Polsko-Amerykański Bank w Krakowie. PAEF was financed by the US Congress and its policy was to encourage the Polish market economy by helping to finance small companies96. In order to obtain US financing, the new institution had to be free from all links with the former regime 97. In 1994, the bank once again changed its name, becoming Pierwszy Polsko-Amerykański Bank S.A. (PPAB), or First Polish American Bank. The bank differed from its competitors in that its approach was more liberal and market-oriented, it tended to recruit very young staff, and it spe- cialised in the SME segment. In 1995, PPAB took over the assets of Enterprise Credit Corporation (ECC), a PAEF subsidiary that provided fixed-rate dollar loans to small and medium-sized Polish enterprises for terms of six months to five years. ECC brought PPAB its LPOs, a loan portfolio of around $20 million and a team of 47 credit analysts.

In late January 1997, the first contact took place between the representatives of Générale de Banque, J. Tack and P. Goffin, PPAB management and its main shareholders: PAEF, which held a 54.68% stake; and the IDA with an 11.26% holding. The remaining shares were floating on the Warsaw Stock Exchange, where the bank had first been listed in 199498. In March 1997, the negotiators agreed on the principle that Générale de Banque would take a stake in PPAB, that together they would set up a Eurodesk for Générale de Banque customers who were interested in Poland, and that representatives of the Belgian financial institution would join the Board of the Polish bank.

96. In 1997, PAEF was the third largest investor in Poland, with investments amounting to half a billion dollars.

97. From Une banque différente, ( A Different Bank ) in Fortis Tribune, April 2006, page 11.

98. Stock market price quotations were however of rather limited significance: only 10% of the shares were floating freely and the Stock Exchange organisation was still rather rudimentary.

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