2011 Annual Report

VIII.1. Corporates and Institutions (BRE Bank)

Market conditions in the corporate sector improved compared to 2010 although the level of activity was lower than anticipated at the beginning of the year 2011. The growing utilisation of production capacity did not translate into substantially increased investment activity, as corporates continued to rely extensively on their own funds for the financing of their investments. Nonetheless, acceleration in corporate lending was registered towards the end of the year particularly in the segment of the largest enterprises.

In the context of the prevailing conditions, BRE Bank’s efforts in the corporate banking segment focused on maximising the existing market potential. With continued focus on identifying new high potential clients, BRE Bank was able to increase the number of corporate clients to a record level of 13,977 entities. In 2011, gross client acquisition increased by 5.0%, with nearly 19% share of international clients among the newly acquired customers, as a result of efficient cooperation with Commerzbank Group.

Furthermore, the Bank’s market shares in key products were maintained or expanded. In particular, the corporate deposits market share increased by 1.3 p.p. to 9.9 % in 2011 from 8.6% in 2010 while the corporate loans market share expanded 0.6 p.p. to 6.8% in 2011 up from 6.2% in 2010.

The growth of the segment’s net income in 2011 continued to be supported by transactional banking revenues, an area of the Bank’s strategic focus due to its high growth potential and significant client interest. In particular, the Bank won several important tenders in the transactional banking area including the implementation of the Silesian Public Transportation Services Card and a City Card designed jointly with the city of Cracow.

Finally, a 72% rise in project finance loans is a notable example of BRE Bank’s product strength and ability to service particular corporate client needs in a changing market environment.

VIII.1.1. Increase of Corporate Client Base

During 2011, BRE Bank acquired 2,343 new corporate clients, of which 63.4% were K3 clients and 30.7% were K2 clients. The total number of clients reached 13,977 companies at the end of December 2011, up by 706 YoY.

K1 represents the segment of the largest corporations with annual sales of over PLN 500 million, K2 is the segment of medium sized corporations with annual sales between PLN 30  and 500 million and K3 is the segment of small and medium companies with annual sales between PLN 3 and 30 million.

VIII.1.2. Product offer

Loans and Deposits

The volume of corporate loans and deposits is presented in detail in chapter XI.2.1.

The market for loans to enterprises grew by 19.4% in 2011. The market share of BRE Bank’s lending to enterprises grew to 6.8% at the end of December 2011 versus 6.2% a year earlier.

The corporate deposits market increased by 12.5% in 2011. The share of BRE Bank in corporate deposits market increased to 9.9% at the end of December 2011 compared to 8.6% at the end of 2010.

BRE Bank, in line with its strategy, continued to intensify its activity in servicing the public sector. The Bank’s market share in loans granted to local governments at the end of December 2011 reached 6.7% compared to 4.1% at the end of 2010.

Structured Finance, Project Finance and Syndicated Loans

This area of the Bank’s Corporate Banking business includes M&A finance, project finance, syndicated loans and mezzanine finance. Throughout 2011, the Bank remained a major player on the market for syndicated loans and participated in 44 syndicated loan transactions. BRE Bank newly generated and refinanced exposures in respect of syndicated loans in the amount PLN 3,975 million. The Bank also finalized 20 bilateral loans totalling PLN 743 million. The total value of loans and guarantees granted by the Bank during 2011 amounted to PLN 4,848 million.

Transactional Banking  

BRE Bank Group’s comprehensive cash management offer, supporting the Group’s long-term relationships with corporate clients, resulted in a further increase of payment identification transactions and of the number of clients using advanced cash management solutions.

In 2011, the number of Direct Debit transactions reached 3,532 thousand, which represents an annual increase of 24.2%. The number of Trade Payment Identification transactions has also been growing dynamically. The number of transactions executed in 2011 exceeded 10 million constituting an increase of 14.5% compared to a year earlier. In 2011, the number of clients using the most sophisticated solutions involving cash pooling on bank accounts rose by 9.5% compared to December 2010. At the end of 2011, there were 645 clients using Cash Pooling and Shared Balance offers.

The following figures illustrate the development of transactional banking in 2011:

  • The number of domestic transfers made by corporate clients in 2011 increased by 28.0% YoY
  • The number of foreign transfers increased by 23.0% compared to 2010 with the highest rise observed in the case of SEPA transfers which surged by 42.0% in the discussed period
  • The volume of cash processing services for corporate clients increased by 27.0% YoY  
  • The total number of corporate cards issued grew by more than 173.0% YoY; the most dynamic growth, of 255.0%, was observed in prepaid cards
  • Over 100 thousand cards were issued as Electronic Money Instrument
  • The number of users of the iBRE system rose by 13.0%. Currently, there are 58,147 active authorisations to utilise the iBRE platform.

Development of the corporate banking offer

The Transactional Banking area of BRE Bank continued its efforts to expand the product offer, to streamline processes and to implement solutions aimed at increasing the satisfaction of the Bank's corporate clients. The area’s major projects in 2011 included:

  • Electronic Money Instruments offer. BRE Bank, in cooperation with MasterCard launched an issue of cards in the form of electronic money becoming the first institution to offer this solution to its corporate clients. BRE Bank offers two cards: MasterCard eMoney PayPass, a reloadable card suitable for contactless payments, and MasterCard eMoney, an electronic card substitute for cash that cannot be reloaded once utilised.
  • Use of Electronic Money Instruments in clients’ projects, e.g. the Sports Fan Card issued for football clubs (Korona Kielce, Pogoń Szczecin, Wisła Płock), the Event Card used at major cultural events organised by Alterart (Coke Live Festival, Selector Festival, Heineken Open’er Festival) or the City Card designed jointly with the city of Cracow.  
  • Completed implementation of all products under the CashBREaker project. The two-year project the Central Cash Management System in BRE Bank Group was completed. CashBREaker is a central cash management system used by MultiBank outlets, corporate branches of BRE Bank and sorting offices cooperating with the Group. This solution allowed for reducing costs and optimizing cash processes in the entire Bank.
  • Modification of the Integrated Bank Account Agreement (ZURB) documentation. To maximise clients' convenience, the Bank introduced modifications aimed at streamlining the process of signing new agreements, and made necessary changes in the already signed agreements at the request of clients. The modifications are expected to improve the effectiveness of product documentation management and to make the offer more flexible. The modified application for opening ZURB sets a new market standard in terms of transparency, conciseness and compliance with the applicable regulations and good practices.
  • iBRE platform functionality enhancement. The platform was enhanced with several new modules including: Custody (presentation, management and trading in securities), Liquidity (collective information on accounts and orders, liquidity analysis, presentation of shared balance or cash pooling structures and limits), Business Information (access to market information downloaded from various sources). In addition, an option for active information exchange with the Bank was added to the iBRE Client Area.  
  • Successful tender for the Silesian Public Transportation Services Card. In November 2011, the process of selecting the main provider of the Silesian Public Transportation Services Card was finalised. Asseco Poland and BRE Bank consortium won the tender for supply, implementation and maintenance of the system servicing the Silesian Public Transportation Services Card. The project involves the introduction of a system of electronic payments for services provided by public institutions in the Upper Silesia region through the use of electronic contactless cards. Apart from the function of electronic money, the card will serve as citizens’ ID, a carrier of electronic signature as well as a travel card. In addition, an electronic platform integrating online public services in the region will be launched.  
  • Continuation of Cross Border Business Enhancement Project. The aim of the “Cross Border” project is to facilitate the cross border co-operation within Commerzbank Group in services provided to German-speaking international clients that conduct their business activities in more than one country. The project, when completed, should result in significant harmonization of services and products offered within the Commerzbank Group. The harmonization involves, among others, a revised organization of servicing of international clients, utilization of dedicated CRM infrastructure, close co-operation of Commerzbank’s and BRE Bank’s product sales forces and streamlining of cross boarder credit processes. As a result, a number of  German-speaking clients operating in Poland have already been acquired and serviced through the joint efforts of Commerzbank Group and BRE Bank Group.  

VIII.1.3. Corporate Network Enhancement and “Branch of the Future” Project

As a result of a detailed analysis of the territorial layout of small and medium enterprises in Poland additional new locations were identified and marked for the future roll-out of the Bank’s corporate banking presence.

In 2011, 5 new branches were opened: in Nowy Sącz and Toruń, Wałbrzych, Branch IV in Warsaw and Koszalin. The unit in Koszalin is a pilot model of the so called “Branch of the Future” concept, combining corporate and retail banking offering (MultiBank) with the aim of achieving additional cost and operational synergies. The Bank expects cost synergies mainly in the cash service area in which the needs of corporate and retail clients are similar. Additionally, MultiBank clients will have the option to use night depositories which are not available in traditional retail branches. On the other hand, corporate clients will have the possibility to use cash deposit machines which are usually not available in other corporate branches. Apart from cost synergies, the Bank expects an increase in the effectiveness of cross selling, especially among corporate clients to whom retail products will be offered. At the end of 2011, the Group operated 29 branches and 19 corporate bureaus.