2011 Annual Report

VI. BRE Bank Shareholders and Share Price on the WSE

VI.1. BRE Bank Shareholders

Commerzbank AG is BRE Bank’s strategic shareholder. Through a 100% owned subsidiary, Commerzbank Auslandsbanken Holding AG., Commerzbank held 69.72% of BRE Bank shares and votes at the General Meeting as of December 31, 2011.  

The stake of Commerzbank has been increasing gradually, from 21.0% in 1995 through 50.0% in 2000, to the level of 72.16% in 2003. Since 2005, Commerzbank’s stake has reduced slightly due to the execution of a management options scheme at BRE Bank.

Pursuant to a notice received on July 8, 2011, the Bank was informed that ING Powszechny Fundusz Emerytalny became the owner of BRE Bank shares representing 5.44% of the votes at the General Meeting of the Bank.

All of the remaining shareholders hold stakes not exceeding 5.0% of the votes at the General Meeting of the Bank and comprise individual and institutional investors, in particular Polish pension funds as well as Polish and foreign investment funds.

Areas of co-operation with Commerzbank

Under a strategic agreement signed in 1994, BRE Bank has received several capital injections from Commerzbank, the last of which in 2010 totalling c. PLN 1.4 billion as Commerzbank acquired c. 70.0% of new issue shares during BRE Bank’s capital increase. BRE Bank has received subordinated loans in CHF totalling CHF 950 million. These were equivalent to c. PLN 3.4 billion at the end of 2011 as compared to PLN 3.0 billion at the end of 2010 (with the increase solely explained by FX effects). In addition, the Bank used funding from Commerzbank; credit lines (excluding subordinated loans) stood at PLN 20.1 billion at the end of 2011 compared to PLN 19.4 billion at the end of 2010.

On February 22, 2011, BRE Bank Group was informed by Commerzbank that in view of BRE Bank Group’s sustainable core capital and earnings strength and in accordance with international standards, the existing letters of comfort issued to BRE Bank and its subsidiaries BRE Bank Hipoteczny and BRE Leasing would expire by the end of March 2011. In the information delivered to BRE Bank Group, Commerzbank AG confirmed that BRE Bank is a strategic core investment of Commerzbank Group and together with its subsidiaries part of the funding pool of Commerzbank Group.

A technical co-operation agreement gives BRE Bank access to the network of Commerzbank and its correspondent banks around the world. In addition, Commerzbank offers its know-how to BRE Bank, enabling co-operation in many areas under separate agreements. The key areas include:

1) Risk controlling, including:

  •  market risk and liquidity risk measurement methods
  • operational risk monitoring methods
  • corporate client rating system
  • credit process optimisation, credit risk monitoring
  • harmonisation with Basel II and Basel III requirements.

In particular, the Bank uses the know-how of Commerzbank experts in a current project implementing statistical methods of calculation of regulatory capital requirements for credit risk (AIRB). While decisions on credit risk, market risk and liquidity risk are made by BRE Bank, risk management methodologies are systematically agreed with Commerzbank.

2) Co-operation in serving international clients, including Commerzbank clients
3) Compliance and money laundering prevention
4) Co-operation in logistics and IT
5) BRE Bank’s use of Commerzbank’s bank ratings
6) Shared reporting system in accounting and controlling.

BRE Bank also participates in the Commerzbank Group multi-year-planning system.

VI.2. BRE Bank Shares at the end of 2011

At the end of December 2011, the following key facts can be highlighted:  

  • Total number of BRE Bank shares: 42,102,746 ordinary and bearer shares  
  • There are no preferred shares, each share represents one vote at the General Meeting
  • Nominal value: PLN 4 per share
  • BRE Bank share capital: PLN 168,410,984, fully paid up
  • The shares are listed on the Warsaw Stock Exchange (WSE) since 1992
  • The shares participate in the following WSE indices: WIG, WIG20, WIG Banks, WIG 20 short, WIG 20 lev and WIG PL.  

In 2011 the number of shares increased by 16,072 shares, which were issued under the long term incentive program for The Management Board. As a result of new issues, BRE Bank’s share capital increased by PLN 64.3 thousand.

VI.3. BRE Bank’s Stock Performance on the WSE

The performance of stock markets in Poland and abroad in 2011 was negatively impacted by the aggravating fiscal condition of Europe’s peripheral economies affecting the valuations of most companies and the banking sector in particular.

The closing price of BRE Bank shares on WSE’s final day of trading in 2011 (30 December) stood at PLN  246.0, representing a decrease of 19.1% compared to the price of December 31, 2010. At the same time, WSE’s WIG, WIG20 and WIG Banks indices decreased by 20.8%, 21.9% and 21.7%, respectively.

At the end of 2011, the market capitalisation of BRE Bank amounted to PLN 10.4 billion (EUR 2.3 billion) compared to PLN 12.8 billion (EUR 3.2 billion) as at December 31, 2010.

In 2011, the average daily trading in the shares of BRE Bank reached PLN 12.8 million and was higher compared to 2010 (PLN 11.2 million).

At the end of 2011, the Bank’s market capitalisation implied the following valuation ratios:

  • P/BV ratio at 1.3x compared to 1.9x a year earlier  
  • P/E ratio at 9.1x compared to 17.4x in 2010.

VI.4. Investor Relations (IR) function at BRE Bank

BRE Bank’s IR function integrates transparent communication regarding the Bank’s performance and strategy in order to promote its equity story and financial achievements in full compliance with all securities regulations.

BRE Bank has traditionally paid close attention to ensuring effective communication with its investors and analysts. As such, the Bank’s IR Team established and maintained day-to-day dialogue with existing and prospective investors and analysts through regular meetings, calls, conferences and road-shows in Poland, Europe and the United States.

The representatives of the Management Board took an active role in the Bank’s dialogue with investors, analysts and rating agencies having participated in the majority of meetings held during the year. In 2011, well over  300 different shareholders took part in 199 meetings. In particular, the representatives of the Bank's Management Board took part in seven foreign investor conferences and three domestic ones. Meetings with investors were also held during four foreign roadshows in Europe and the United States. Furthermore, two specialist due-diligence sessions were organised as part of regular meetings with the Bank’s rating agencies.

In line with the practice of the past years, 4 conferences for analysts and investors were held in 2011 to discuss the Bank’s quarterly results. The conferences were broadcasted online to ensure their broadest possible reception.

The Internet site of the Bank’s investor relations (www.brebank.pl/en/investor_relations) is an important communication platform for the Bank. It provides investors and other stakeholders with information on the shareholding structure of BRE Bank, Annual Meetings, ratings, performance of the Bank's shares on the WSE and gives access to annual, periodic and current reports, presentations on the Company's strategy and results, business and financial data spreadsheets and details on research analyst consensus estimates for the Bank. Finally, the recordings of quarterly performance conferences are also available for online viewing.

BRE Bank Group and its performance are monitored by analysts representing various financial institutions, banks and brokers. At the end of 2011, BRE Bank was covered by 21 analysts,  representing both domestic and foreign institutions.