On 25 September 2006, BRE Bank and Polish Enterprise Fund V (“PEF V”), a private equity fund managed by Enterprise Investors, signed an agreement to sell 100% of shares of SKARBIEC Asset Management Holding (“SAMH”). The transaction price is PLN 155 million; its forecasted impact on the consolidated pre-tax profit of the BRE Bank Group will be approximately PLN 100 million in 2007. The transaction will not be closed before 8 January 2007. Skarbiec Investment Management (“SIM”), which will be acquired by BRE Bank from SAMH, and PTE Skarbiec-Emerytura, which has co-operated with the Skarbiec Holding only at the operating level and has not been its part in terms of the ownership structure, were excluded from the transaction with PEF V.
The transaction includes all SAMH shares held directly by BRE Bank as well as 100% of indirectly held shares of Skarbiec Towarzystwo Funduszy Inwestycyjnych SA (“STFI”) and 100% of indirectly held shares of BRE Agent Transferowy Sp. z o.o. However, Skarbiec Investment Management SA (“SIM”) was excluded from the transaction.
The price for all SAMH shares held by the Bank will be PLN 155 million.
In addition, under the Agreement, prior to the transaction closing date, SAMH will pay BRE Bank a cash surplus of PLN 62 million resulting from the acquisition of 62 thousand SAMH shares from the Bank by SAMH for cancellation. As a result, on the closing date, the transaction will include 72,582 SAMH shares representing 100% of the reduced share capital of SAMH.
The sale of SAMH shares to PEF V is subject to the fulfilment of the following conditions precedent prior to the transaction closing date:No objection of the Financial Supervision Commission (“KNF”) concerning the transfer of direct control of STFI following the acquisition of SAMH;No objection of KNF concerning the planned disposal of STFI shares following the sale of SAMH shares;Approval of the Competition and Consumer Protection Office (“UOKiK”).Unless all the conditions precedent are fulfilled within 6 months of the signing of the Agreement, the Agreement will be terminated.
The transaction will be closed upon the fulfilment of all the conditions precedent, not earlier than 8 January 2007. The overall impact of the transaction on the consolidated pre-tax profit of the BRE Bank Group will be approximately PLN 100 million in 2007.
Open Architecture Strategy for Investment Funds
The sale of the SAMH shares derives from BRE Bank’s strategy of co-operation with investment funds. Over the past years, BRE Bank has successfully leveraged the open product architecture model. It aims to provide Bank customers with the best and very diverse financial products available on the market also from suppliers other than the BRE Bank Group.
The strategy has been successful in the past years also as pursued by the selling organisation of BRE Bank’s retail banking franchises, mBank (Investment Fund Supermarket) and MultiBank (Savings Centre), as well as in BRE’s private banking service. It gave rise to the decision to negotiate the sale of SAMH shares with Polish Enterprise Fund V.
BRE Bank’s open sales architecture gives retail customers access to nearly 90 investment funds where the customers invested over PLN 1.1 billion at the end of August 2006, including approximately PLN 890 million via mBank’s Investment Fund Supermarket and over PLN 270 million through MultiBank’s Savings Centre. The Bank also applies the open sales architecture model in its private banking service where customers are also offered funds and products of foreign suppliers.
“The success of the strategy and our deep conviction that an open architecture of selling investment funds is the best match for customers’ interests and needs have encouraged our decision to continue working with Skarbiec TFI as a seller, not necessarily an owner,” said BRE Bank SA CEO Sławomir Lachowski.
BRE Bank is expecting its business relations with Skarbiec TFI to remain unchanged after the sale of SAMH shares.“Pursuant to the open product architecture strategy, Skarbiec TFI will remain an important supplier of investment funds for our retail and private banking customers,” added Sławomir Lachowski.
Private Banking Evolves into Wealth ManagementSkarbiec Investment Management (“SIM”), a manager of customers’ securities portfolios, is excluded from the transaction with PEF V, a private equity fund managed by Enterprise Investors. BRE Bank will buy SIM from SAMH before the closing date of the transaction with Polish Enterprise Fund V. BRE Bank will pay SAMH PLN 12 million for 100% of SIM shares.
The decision to buy SIM is a part of BRE Bank’s strategy of expanding its private banking service and offer. After the sale of the SAMH shares, BRE Bank is planning to continue and to further expand its securities portfolio management service for private banking customers. BRE Bank’s asset management service has featured investments in equities and bonds. Now the Bank will also offer other types of assets, including structured products and various investment funds, its service evolving towards wealth management. “BRE Bank’s private banking service will evolve towards broadly understood wealth management. The wealth management service will be a key part of BRE Bank’s offering for the most affluent Poles with assets over PLN 2 million,” said CEO S.Lachowski.
BRE Bank’s private banking service will combine management of customers’ portfolios with new products for the most affluent Poles. The new wealth management service will feature asset allocation management and advisory on real property and art investments as well as legal and tax consulting. It is BRE Bank’s strategy to establish a subsidiary leveraging the private banking business model, mainly providing asset management services to private banking customers, and in addition supplying expert know-how on areas other than equity investments.
“We want to move beyond equity investments in our wealth management service for private banking customers; we will offer other services like art banking, tax and investment consulting, real property advice. Global trends on mature markets define wealth management as much more than investments in securities. We will be the first to introduce the modern wealth management practice in Poland, providing private banking customers with a top quality offer,” said CEO Lachowski.
This will be the mission of Jacek Dekarz who will join the Management of SIM as of 9 October 2006 to be later appointed CEO of the new company BRE Wealth Management.
Jacek Dekarz is Investment Advisor; he previously worked as Asset Manager with TFI Union Investment.