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Getin’s rapid rise From the bottom of the sea

Jan Cienski reports from Warsaw on the adrenaline-fuelled journey from commercial diver to billionaire banking mogul of Getin Holding founder Leszek Czarnecki.
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When Leszek Czarnecki made his first fortune in the 1990s, he dabbled with the idea of spending some of his newly acquired millions on becoming a space tourist. Instead, the serial capitalist plunged back into business, creating Poland’s fastest-growing bank, which is now looking at aggressively expanding into Russia and Ukraine.

Mr Czarnecki’s Getin Holding reported profits of 82m zlotys (€21m) for the first six months of this year, compared with profits of 32m zlotys for the same period in 2005. It is Poland’s 14th bank in terms of capital, eighth in terms of sales, fifth in mortgages and second in car loans.

“We started as practically a greenfield,” boasts Mr Czarnecki, noting that in 2002 he bought Getin Holding for 0.76 zlotys per share on the Warsaw Exchange. They are now worth more than 11 zlotys.

The company, of which Mr Czarnecki owns 67%, had a market capitalisation of $3.5m in 2002 and as of November 2006 was approaching $3bn.

Polish purchase

In November, Getin also completed the largest ever public offering by a private company on the Warsaw Stock Exchange, raising more than 1.2bn zlotys, half of which will be used to grow the Polish bank and the other half to buy small banks in Russia and Ukraine.Getin, and Mr Czarnecki, have come very far, very fast.

During the final years of Polish communism, Mr Czarnecki, who is a commercial diver and holds a PhD in economics, spent much of his time below the surface as the founder of an underwater construction company.

In his diving business he noticed that it was almost impossible to lease a car. In 1991, as Poland shifted away from communism, he founded Europejski Fundusz Leasingowy (EFL), bringing the then-unknown idea of leasing to Poland. Growth exploded and by 2000 revenues stood at €445m.

In 2001, Mr Czarnecki sold his company to France’s Crédit Agricole, and pocketed €412m, elevating him into the list of the wealthiest Poles. As part of the deal he became a quarter owner of Crédit Agricole Polska, which, as one of its holdings, owned a small business-to-business internet company called Getin.

Going it alone

Playing second fiddle in a multinational corporation did not appeal to Mr Czarnecki, and he sold his shares to the French at the end of 2002.

His pockets filled, the adrenaline-hungry Mr Czarnecki seriously considered taking a space trip, even travelling to Moscow to train for the flight. But in the end Mr Czarnecki, who still spends his holidays diving to bone-crushing depths, decided to get his thrills in a more earth-bound fashion through creating another successful business.

He bought Getin and turned it into an investment fund. In 2004, Getin bought a small Silesian bank called GBG and a loss-making bank from the central city of Lodz called Bank Przemyslowy. They formed the basis of Getin Bank.

The strategy for expansion was to grow by avoiding low-margin businesses and focusing on three areas: cash loans, car loans and mortgage loans. The expensive and time-consuming task of building customer relationships took a back seat.

Mr Czarnecki compares his business with selling fast-moving consumer goods, something he calls the “fire and forget” model.

A key to building the business has been attracting young and hard-working people. Mr Czarnecki, who is 44, says he is one of the oldest senior managers in the company.

“I wanted to hire the top people, not just good but the very best,” he says.

The problem was how to lure successful and well-paid managers working for international businesses into a small start-up bank. The answer was to allow the newcomers to set up their own companies within the Getin fold, where they would have a large stake in the company and be working for themselves as much as for Mr Czarnecki.

The success of the model was shown by Getin’s ability to hire Bernard Afeltowicz, formerly the head of AIG Bank Polska, to head Getin’s international operations. His reward – a 25% stake in the eventual banks operating in Russia and Ukraine.

Mr Czarnecki says that this model has created 15 dollar-millionaires among his staff and built a very strong entrepreneurial culture.

The result has also been a proliferation of companies and brands. In addition to Getin Bank, with 154 branches, the company owns Open Finance, an independent financial adviser; Fiolet, a mortgage broker; Carcade, a leasing company based in the Russian region of Kaliningrad; as well as a host of small distribution companies. Mr Czarnecki also owns LC, a construction company that plans to build the largest residential building in his native Wroclaw.

Up-market banking

There is also a new two-branch bank called Noble Bank, aimed at Poland’s newly wealthy and at a class of older people who have become asset rich – mainly though owning houses and land which has skyrocketed in value recently. The aim is to replicate Citibank’s model, which has created Citigold as its wealth management division.

Mr Czarnecki is confident that he can manage this sprawl of companies and continue their rapid growth. His ambition is to make Getin one of the country’s 10 largest banks within two years.

Those prospects do not seem to be unrealistic. Poland’s economy is expected to grow by 5.2% this year and 4.7% next year. Despite a real estate boom that is sweeping Poland’s largest cities, there is still enormous capacity for growth in the mortgage market. Poland only has a 27% loan to GDP ratio, compared with 112% in western Europe.

The management challenge is going to be made still more difficult by the company’s strategy of expanding eastwards.

Currently, Getin’s only foreign operation is Carcade, the Kaliningrad leasing company. But with as much as 600m zlotys to spend, the holding is now looking at buying a small bank in Ukraine and another in Russia. Buying an existing bank is easier than opening a new one because of the difficulty of obtaining banking licenses in both countries.

“We want to bring in the Polish model,” says Mr Czarnecki, who is optimistic that despite bureaucratic hurdles there is much money to be made in fast-growing economies where as much as 90% of the population remains unbanked. “Russia is over-regulated but the margins cannot be compared with developed markets and the potential is enormous. It is similar in Ukraine.

“In the past year I’ve earned more money than ever before in my life, and next year I’ll make still more,” says Mr Czarnecki, leaning back in a sleek chair in the wood-panelled office of Noble Bank, located in suburban Warsaw.

According to Forbes Magazine, Mr Czarnecki’s net worth is about $1bn, making him one of Poland’s three richest men.

Asked if he has similar plans to expand elsewhere in the region, Mr Czarnecki admits that he would like to see his bank open in most of the former communist countries that joined the EU in 2004.

“But not immediately,” he cautions. “Our business is growing at 70% to 100% a year and to tell the truth I’m afraid of growing any faster. This is fast enough.”

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