The Polish banking sector is developing a new specialisation. Product sales have been replaced with mortgage loan management

One of the effects of the banking sector consolidation in Poland is that banks are becoming more and more specialised. In the field of mortgage loans institutions are appearing which manage such loan portfolios. And while these institutions are not aggressively fighting for new customers, the example of BPH, a pioneer in this segment, shows that such operations can create new business opportunities. The Bank, whose spinned-off part was taken over in 2016 by Alior, had to build a new business model virtually from scratch. It has based a large part of its new operations on outsourcing.

“Currently, the leading trend on the banking market is consolidation. In addition to universal banks, there is more activity from mortgage banks, and a growing specialisation of those which are handling portfolios of loans for real-property financing,”  Włodzimierz Kiciński, Deputy President of the Polish Bank Association, told Newseria Biznes. “It seems there is a chance for growing this business area, and from a small niche, they can move to specialisation and improved effectiveness.

In a way, consolidation is the by-product of consolidation processes. In many cases, as a result of consolidation the bank whose spun-off part was taken over by another entity is left only with a mortgage loan portfolio.

“The spinning-off of mortgage loan portfolios, which are relatively big and require specific knowledge, so also skilful management, makes such portfolios easier to manage,” Włodzimierz Kiciński said.

The first bank to operate in this framework has been BPH. After selling part of its business in 2016 to Alior Bank, BPH has managed its mortgage loan portfolio, and with its sum of assets the bank ranks in Poland’s top ten.

“BPH is a bank that operates under the licence of a universal bank but in our operations we are now focusing on managing our mortgage loan portfolio,” said Paweł Bandurski, President of the Management Board at BPH. “The challenges we’re facing include, without doubt, issues related to profitability, where specialised banks by definition have a limited range of sources of income. On the other hand, this motivates us to look for unconventional solutions, and go beyond standard bank processes. And this is how we operate in our current business model.”

The bank provides its services to clients who have taken out mortgage loans there, and does not acquire new customers by actively offering bank accounts, cards or loans. Despite the limited ability to diversify its income sources, the bank has to continuously ensure its mortgage debt sustainability.

“Banks which operate on the basis of universal bank licences and which employ specialists with experience much greater than mortgage loans, whether it is retail banking, SMEs, or corporate finances, can in the future constitute a great platform for business development,” said Paweł Bandurski. In addition, given the current consolidation processes, new specialist banks, similar to ours, can be expected to appear. Direct cooperation between such institutions, and the establishment of shared platforms in combination with automation, can provide opportunities for making them even more cost-effective.”

It is possible that other banks will divide or spin off separate institutions to manage their mortgage loans, as the Polish banking sector is still consolidating. This is exactly what the take-over of Raiffeisen Polbank by BGŻ BNP Paribas is to look like. Most probably, an identical mechanism will be used in another transaction which is on every market player’s lips, namely the take-over of Deutsche Bank Polska by BZ WBK. This could create a new form of banking in Poland which is not aggressively trying to win customers, but focuses on providing quality service to existing customers and growing within this new model.