Poland Today Business Review+ No. 030-31

No. 030-31 / 14th April 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

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MANUFACTURING & PROCESSING

Polish tile maker Rovese final-izes EUR 200m investment in Russia page 5

Bridgestone gets EU grant for Poznań project, finalizes Stargard expansion page 5

FagorMastercook to sack 1,120 employees in Wrocław by May-end page 6

BANKING & FINANCE Regulator orders private equity fund Abris to sell FM Bank page 7 BZ WBK gets green light to take over Santander Consumer Bank page 8 Irish export finance revolu-tionaries Aztec Money enter Poland page 8

ENERGY & RESOURCES

Government adopts long awaited bill on renewable en-ergy page 10

PROPERTY & CONSTRUCTION

Ukrainian investor to build office project in downtown Warsaw page 11

Kraków's tallest building to get new name and makeover page 12

TRANSPORT & LOGISTICS

Ryanair to open bases in Gdańsk and Modlin this year page 14

Another speculative project from Prologis in Wrocław region page 11

RETAIL PROPERTIES

Three new shopping centers opened in Q1, 550,000 sq.m is under construction page 16

IT & TELECOM

HP owns up to major corruption in Poland, pays fine in the US page 17

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 18-20

Deputy Prime Minister Elżbieta Bieńkowska was one of many distinguished guests who took part in this year's edition of Poland Today's Primetime Warsaw conference. Photo: Poland Today

Top leaders Top leaders Top leaders Top leaders memememeeeeet t t t at Primetime Warsaw at Primetime Warsaw at Primetime Warsaw at Primetime Warsaw Key decision makers and business leaders shared their views on the future of the Polish capital at the 2nd edition of Poland Today's annual Primetime Warsaw conference. pages 2-4

Convergys to employ 250 in LublinConvergys to employ 250 in LublinConvergys to employ 250 in LublinConvergys to employ 250 in Lublin US contact center operator Convergys will open its 2nd Polish unit in Lublin. The center, which will cater to German speaking customers, is to create some 250 jobs by year-end. page 13

weekly newsletter # 030-31 / 14th April 2014 / page 2

PRIMETIME WARSAW II

Warsaw's blueprint for Warsaw's blueprint for Warsaw's blueprint for Warsaw's blueprint for the future the future the future the future

The capital's rise has been impres-sive, but further development de-pends on infrastructure, autonomy and detailed planning. The copious construction of office buildings and high-rises, a flood of foreign investment, global businesses establishing regional and continental headquarters in the city – Warsaw’s development over the past decade or so has been astonishing. Whereas Prague was once considered the power centre of the region, Poland's capital has clearly now taken on that mantle and is now the most important city in Central and Eastern Europe both politically and economically. The city has "risen like a phoenix from the ashes," said Warsaw Mayor Hanna Gronkiewicz-Waltz in early April at Poland Today's Primetime Warsaw II confer-ence. "This is a special time for Warsaw, where we can make use of our position in Europe and have an influ-ence." The city's meteoric rise has largely occurred under her leadership over the past seven and a half years, during which a staggering PLN 34bn has been invested in the city from local government, national government and private funds, according to the mayor. Infrastructure off track Still, much remains to be done if the capital wants to reach the development levels of its Western European counterparts. Infrastructure is one key factor. Warsaw has devoted enormous resources to the construction of the city's second subway line: it will cost some PLN

30bn to fully complete. The project is critical for facili-tating east-west transportation across the city, but even once it is completed the city's subway network will pale in comparison to those in say, London, Paris or Berlin. Moreover, construction of the first portion – a 7km stretch from the eastern district of Praga to Rondo Daszyńskiego just west of the city centre costing some PLN 4bn – has dragged on, missing its initial comple-tion date of 2013. It is now expected to open before the end of this year. The delay, along with road closures related to the project, have irked Varsovians.

Minister of Infra-structure and Development Elżbieta Bieńkowska em-phasized that the government’s new national metropolitan pol-icy will encourage cities to come up with “clear, con-cise” develop-ment plans. Photo: Poland Today

The completion of a ring road around the city is an-other important infrastructure investment critical to the city's development. "We are ashamed that we don't have a complete ring road around the city," said Gronkiewicz-Waltz. "It’s something very important we are missing." But she added that the investment is the responsibility of the central government, not the

city. Indeed, she emphasized that in order to reach its full potential the city needs more independence from the central government. According to the mayor, the city can't even decide for itself on such minor issues as parking fees. She pleaded for more power to be de-volved to municipalities. Municipal autonomy The government seems to be listening. Deputy Prime Minister Elżbieta Bieńkowska, who is also in charge of the strategically important of Infrastructure & Devel-opment, revealed at the conference that the govern-ment was launching a national metropolitan policy that would eventually lead to more autonomy for cities to make development investments. The policy sets out goals for cities such as increasing competitiveness and raising the standard of living. It will emphasize the need for cities to come up with precise plans for spending national and European funding. The government is also working to put municipal de-velopment on the EU's radar, especially when it comes to dedicated funding for such projects. "The EU hasn't paid much attention to city development over the past few years," said Minister Bieńkowska. "But we have experience in this area and Poland has blazed a trail for the direction of this discussion." PPP and R&D Public-private partnership initiatives could also help spur development, if only they could get off the ground. For years firms have pleaded both with the central government and local authorities to do more to facilitate such investments. But politicians have shied away, wary of a public backlash and arguing that Poles are still highly suspicious of cooperation between gov-ernments and businesses. However, Mayor Gronkie-wicz-Waltz said that Warsaw had already begun working on several such projects, including the con-struction and repair of booths at bus stops, making


street lighting more energy efficient and refurbishing schools.

Warsaw Mayor Hanna Gronkiewicz-Waltz said the central government needs to give more power to municipal authorities. Photo: Poland Today Investments in innovation and R&D will also form a crucial engine driving Warsaw's development toward Western levels. Bieńkowska said that over EUR 4bn would be allocated to Warsaw for such investments. But to maximize the amount of funding the city can receive throughout the European Union’s 2014-2020 budget perspective it will need a clear, focused plan on how investments in innovation will spur development. While Poland was able to spread the funds from the last budget over a wide range of projects and business sectors, new rules will force local governments to tar-get specific innovative industries. The threshold for EU approval of such spending will be higher as well. Governments will have to show precisely how the money will be spent and how it will increase a region’s innovativeness. "Everything comes down to a clear, precise plan," Bieńkowska said.

by Andrew Kureth

PRIMETIME WARSAW II

Warsaw with room for Warsaw with room for Warsaw with room for Warsaw with room for more office and retail more office and retail more office and retail more office and retail projectsprojectsprojectsprojects

Warsaw continues to offer commercial space devel-opment opportunities but it has also become a very competitive market is recent years, said participants in the Primetime Warsaw II conference which Poland Today organized in the Polish capital last month. There is still much room for new office and retail pro-jects in the city but due to the growing competition, developers now need to be very creative while plan-ning their new schemes, the participants in the con-ference said. Large office supply The large supply of new office space in Warsaw admit-tedly remains a challenge for developers, but it should not prove a major threat to the overall shape of the of-fice market as such. The total modern office stock in Warsaw currently amounts to over 4m sq.m and is ex-pected to reach 5m sq.m within the next two to three years. Approximately 300,000 sq.m of new space will be delivered annually in the upcoming years. Jarosław Zagórski, commercial and business devel-opment director at Ghelamco, argued that in the short-term perspective the market will not be able to absorb such a large amount of new office space. He stressed that financial institutions will have an im-portant role to play as natural market regulators. "I hope that banks will be selective in financing new of-fice schemes," Zagórski said.

Tomasz Rusak, procurement and financial director at Hochtief Development Poland, admitted that there is more and more competition among developers in Warsaw. They now have to offer something more than just regular office space to be able to attract ten-ants, Rusak said. Rafał Mazurczak, head of the office and hotel depart-ment at Echo Investment, was more optimistic. He noted that the planned projects are at various stages of the investment process and will not be delivered at the same time.

The panel on high street retail featured (from the left): Sebastian Koziara, Borad Member, PRCH and C&A Polska; Marta Machus-Burek, Director, Colliers International; Piotr Krawczyński, Managing Director & Board Mamber at Kulczyk Silverstein Properties, Michał Olszewski, Vice Mayor of Warsaw, and Radosłąw Knap, Deputy General Manager at PRCH (moderator). Photo: Poland Today

Jarosław Bator, managing director for real estate at Polish State Railways (PKP) pointed out that the ex-isting office buildings are now getting old pretty quick-ly. "New buildings will find their place in the market," Bator said. In his opinion, the public sector will also generate demand for office space in Warsaw in the


near future. Today public officials mostly occupy old office buildings but this will, sooner or later, change, Bator said. Much of the discussion focused on the numerous new office skyscraper projects which have been announced in Warsaw in recent years. A number of them are al-ready under construction, while several other are ex-pected to be launched later this or next year. Referring to the issue of whether the Warsaw market will be able to absorb the space in the under-construction and planned towers, Rusak said that some office tenants favor high-rise buildings, while others clearly prefer to be in boutique projects. According to Zagórski, whose company is now devel-oping the Warsaw Spire complex in the Wola district, new skyscrapers should be built in locations where their construction is justified by the price of land and good transport connections. When it comes to investors, there is currently much demand for medium-sized office buildings in Warsaw, said Piotr Goździewicz, director of capital markets, CEE, at BNP Paribas Real Estate. Room for retail There is also much room for retail in Warsaw but the municipal authorities have to decide where the future shopping centers should be located, said Leszek Sikora, managing director at ECE Projektmanagement Polska. "Is has been a long time since a new large-scale shop-ping centre was last developed in Warsaw," Sikora said. Goździewicz pointed out that the Polish capital has one of the lowest shopping centre penetration rates among the largest cities in Poland.

Admittedly, Warsaw Stock Exchange-listed developer Globe Trade Centre is now planning two large shopping centre projects in Warsaw, but it is not known when exactly the company will be able to break ground on those projects. The schemes, called Galeria Wilanów and Galeria Północna, will respectively be located in the Wilanów and Białołęka districts of War-saw in which many new housing estates have been de-veloped in recent years. Meanwhile, there could soon emerge an opportunity for the development of a new large-scale retail project in downtown Warsaw. PKP is now planning the rede-velopment of the ten-hectare Warszawa Główna site that houses a former railway station and a museum, Bator said. Zagórski stressed that the developers of the new malls should make sure that their centers provide something different from the existing retail offer in Warsaw. Ghelamco itself will not be developing malls, but will rather focus on small convenience centers, he said. During a separate panel discussion devoted to the high-street retail in Warsaw, the participants dis-cussed the various factors hindering the development of that sector of the market. Marta Machus-Burek, director at Colliers Interna-tional, mentioned ownership and legal issues, proper-ty claims and the lack of sufficiently large retail units as some of the major problems that the high streets in Warsaw are facing. Piotr Krawczyński, managing director, board member, at Kulczyk Silverstein Properties, pointed to man-agement problems. It is much easier to manage a shopping centre than a high street in which the prop-erties belong to many owners, he noted.

According to Michał Olszewski, the Vice Mayor of Warsaw, solving the ownership issues will take many years. However, he was convinced that the downtown of Warsaw, as well as the Praga area which Warsaw City Hall plans to revitalize, have considerable high-street potential. Green commitments pay off Empirical data shows that investment in green solu-tions always has a positive impact on property value and rents, Sven Bienert, professor of sustainable real estate at the University of Regensburg and ULI sus-tainability fellow, said during the Primetime Warsaw II conference.

Poland Today invited one of the world's top experts on "green building" - Sven Bienert, MRICS, Professor of Sustainable Real Estate at the University of Re-gensburg and Urban Land Institute Sustainability Fel-low. Image: Poland Today


There is also evidence that sustainable buildings make for better working environments. Green solutions translate into more tenant satisfaction, and this means tangible benefits for the asset owners, Bienert said. Admittedly, many developers continue to view the sustainability issue just in terms of its usefulness in marketing. There are still too many executives who think this is just a marketing gimmick, Bienert said. Reservations about the profitability of green invest-ments may be related to the time gap between the costs and the benefits. Future pay-off sometimes stands against additional upfront cost today. However, Bienert stressed that the sustainability issue cannot just be seen as a pay-off issue, but has to be also viewed as a responsibility issue. He pointed out that the property market is a major polluter. The sector ac-counts for 25-40% of the overall energy consumption, 30-40% of green gas emissions and 30% of the raw materials consumption. "No other sector has a compa-rable high potential for sustainable development," Bienert said.

by Adam Zdrodowski


Polish Rovese finalizes Polish Rovese finalizes Polish Rovese finalizes Polish Rovese finalizes EUR 200m investment EUR 200m investment EUR 200m investment EUR 200m investment in Russiain Russiain Russiain Russia

Poland's top manufacturer of ceramic tiles and bath-room fittings, the Kielce-base Rovese Group has launched production of tiles in the Russian town of Zheleznodorozhny, some 20km east of Moscow. With more than EUR 200m invested in Russia to-date, Rovese is the largest Polish investor in the country.

The Warsaw-listed group acquired Kuchinsky Kermichesky Zavod in 2011, and it has since invested EUR 70m in renovation and modernization of the plant's existing machinery, extension of the factory building and of the plant itself and expansion of the product range. As a result, the plant's initial production capacity has been doubled and currently it manufactures tiles in three technologies on seven production lines. With a staff of 500 employees, the factory plans to make 8m sq.m of tiles this year, to be sold in Rusai and other CIS market. According to Russia's statistical office Rosstat, Polish companied had invested USD 674m in Russia (includ-ing USD 414m in direct investments) by the end of 2012. Although the full-year data for 2013 is not yet available, Rovese's EUR 200m undertaking in Zheleznodorozhny is the largest Polish project in the country to-date.

Rovese Group key figures

-1.0

-0.5

0 .0

0.5

1.0

1.5

2.0

200 6 200 7 2008 20 09 2010 2011 201 2 20 13

-1 00

-50

0

50

100

150

200

Turnover in PLNbn, lef t axis

Net profit in PLNm, right axis

Source: Rovese

Rovese makes ceramic and acrylic bathroom fittings (sinks, shower cabins and trays, toilets, furniture and the like) as well as tiles under a number of brands, in-cluding Mito, Cersanit and Opoczno. The company has been listed on the Warsaw Stock Exchange since 1998 and its main shareholder is the Polish investor Michał Sołowow (owner of property developer Echo In-vestment, floorboard maker Barlinek and chemical firm Synthos). Last year the Rovese group turned over PLN 1.87bn (up from PLN 1.67bn in 2012) and posted a net loss of PLN 64.4m (against a PLN 62.2m loss in the prior year).


Bridgestone gets EU Bridgestone gets EU Bridgestone gets EU Bridgestone gets EU grant for Poznań grant for Poznań grant for Poznań grant for Poznań project, finalizes project, finalizes project, finalizes project, finalizes StargardStargardStargardStargard expansionexpansionexpansionexpansion

The European Commission last week rubberstamped a PLN 82m investment grant for Bridgestone Poznań, one of the two Polish units of Japanese tire giant Bridgestone. The financing covers a portion of the PLN 426m (EUR 105m) upgrade of Bridgestone's Poznań plant, is to create some 200 new jobs, accord-ing to a communiqué by the Ministry of Economy. "We embarked on the expansion of the Bridgestone Poznań passenger tire plant in 2010. This EUR 105m investment enabled us to increase the production ca-pacity to the planned level and create additional jobs. The project allowed us to achieve our primarily objec-tive which was to increase the share of tires produced in Poland in the European market," Paweł Nowaczyk, HR and General Affairs Manager at Bridgestone Poznań, tells Poland Today. "The project began in


2010 and was completed last year. The first series of tires from the new production lines hit the market in January 2012." As part of the investment, Bridgestone Poznań ac-quired machinery and equipment used in the produc-tion of third-generation Run Flat Tires as well as an automated sorting and stacking unit for tires, expand-ed the existing building and developed new buildings and infrastructure on newly acquired land, including systems that supply power, steam, air and nitrogen to the extended production halls. The project included also an R&D component whereby Bridgestone pur-chased and implemented specialized software that analyses the composition and history of finished prod-ucts, among other innovations. As a result of the EUR 105m expansion program, the plant's daily output were to grow from 23,600 up to 29,200 tires, and its workforce – from 1,400 to 1,600 employees.

Last year the Bridgestone plant in Poznań celebrated its 15th anniversary. Photo: Bridgestone

"In Poznań we currently employ c.a. 1,400 workers. We want to increase this number to over 1,500 by the end of 2014," says Mr. Nowaczyk.

The company is also expanding its truck tire plant in Stargard Szczeciński near Szczecin, where it currently employs 750 people. The EUR 120m expansion, which follows some EUR 200m worth of investments in Stargard that Bridgestone finalized in 2009, is close to completion. With Germany's Hochtief as the general contractor, the project were to boost the plant's daily production capacity by approximately 1,350 truck and radial tires (TBR), bringing the figure up to 3,750 tires per day. It is expected to reach completion during the second half of 2014 creating 160 new jobs. "Everything is moving forward as scheduled. To-date we have completed approximately 90% of the total in-vestment. An innovative line of top tread for recycled tires is already in operation and stabilizing production. At the same time, a new line for tire production is un-der construction. Production will start as it was planned in 2H 2014. Recruitment for the new posi-tions is underway and we have sufficient numbers of candidates," Paweł Nowaczyk tells Poland Today. Bridgestone Poznań turned over PLN 1.33bn in 2012 and posted net earnings of PLN 55.5m. Besides the two main production plants, Bridgestone's Polish opera-tions include the Firestone Industrial Products plant Wolsztyn (70km southwest of Poznań) that makes rubber air springs and a shared services center in Poznań, launched in 2011. "With some 120 staff at the moment the shared ser-vices unit EBS Sp. z o.o. is fully operational, covering accounting, finance and fiscal activities for almost all Bridgestone entities in Europe: sales, retail and manu-facturing in more than 20 European countries." Last year the Japanese investor were to launch pro-duction of protective films for solar panels (EVA) in Żarów, in the Wałbrzych zone, creating 67 new jobs. Asked about the Żarów investment, Mr. Nowaczyk re-plies:

"We are now considering the market situation includ-ing current and future demand, and will adjust the production accordingly. Unfortunately, we cannot comment on the size of the business." Earlier this month, Bridgestone Corporation broke ground at the planned site of a new passenger car radi-al tire plant in Ulyanovsk Oblast, Russia. The plant is expected to start production in the first half of 2016 with a workforce of 800 employees. It will produce passenger car radial tires such as winter tires for the Russia/CIS market. Production capacity is estimated to reach approximately 12,000 units a day by the se-cond half of 2018. Bridgestone Europe (BSEU), with European head-quarters in Brussels, Belgium, is a key regional subsid-iary of Tokyo-based Bridgestone Corporation, the world’s largest manufacturer of tires and other rubber products. Bridgestone Europe operates an R&D cen-ter, 8 plants and offices in more than 30 European countries, with over 13,000 employees. BSEU’s premi-um tires are sold both within Europe and globally.


FagorMastercook to FagorMastercook to FagorMastercook to FagorMastercook to sack sack sack sack 1,120 employees in 1,120 employees in 1,120 employees in 1,120 employees in WrocławWrocławWrocławWrocław by Mayby Mayby Mayby May----endendendend

Close to 1,120 employees will be made redundant by the end of May as part of group layoffs at the FagorMastercook plant in Wrocław, one of Poland's largest producers of home appliances. According to Teresa Kalisz, the court-appointed receiver at FagorMastercook, a new investor for the business has failed to materialize and the plant lacks orders that


would ensure it can operate over long-term at mini-mum 50% of its capacity. The collapse of FagorMastercook Wrocław (see BR+ No. 011 page 2) follows the bankruptcy of its Spanish parent Fagor Electrodomésticos. The latter was hit hard by slumping consumer demand and had been scrambling to secure financing to continue operations and pay down a debt of EUR 850m. Unable to reach a viable financing plan, Fagor asked filed for bankruptcy protection last year, with its Polish unit following suit. In February, a Polish court suspended the liquidation of the Wrocław business for three months, giving the receiver time to find an investor who would buy the entire company. The time is running out and it looks like any potential buyers prefer to wait for the receiver to do the dirty work of staff reduction before placing any serious bids.

FagorMastercook's three Polish production plants in

Wrocław have so far failed to find a new owner.

Image: Fagor The production lines at Fagor's three Wrocław plants have been sitting idle since autumn last year and most of their 1,166 employees have been on a mandatory leave of absence. According to last week's announce-

ment by the receiver, 1,188 of them are now to be sacked, including 917 production workers and 201 oth-er staff. "Should the company acquire new orders, the scale of the redundancies may be limited," Kalisz said. Fagor acquired the Wrocław business (then known as Wrozamet) in 2002 where it has since been producing a range of white goods (ovens, hobs, hoods, dishwash-ers, washing machines, and fridges) under three brands: Mastercook, De Dietrich, and Fagor. Although many observers argue that finding a new owner for the Wrocław factory should prove relatively easy, the po-tential buyers may not be interested in keeping all of its current staff or take over their existing employment contracts. At the end of March, Germany's BSH Bosch Und Siemens Hausgeräte GmbH (which produces white goods in Łódź and has recently ac-quired Polish small appliance maker Zelmer) asked Poland's competition authorities for permission to ac-quire a portion of FagorMastercook's Wrocław busi-ness. The company has not replied to Poland Today's questions about their plans. Chinese manufacturers, mainly Haier, have long been seeking to establish a local manufacturing base in the CEE region. The company has been often mentioned as likely buyer for FagorMastercook, despite denials from Haier executives. Earlier last year Haier and the Spaniards struck a deal to build a new refrigerator plant in Wrocław at the cost of EUR 70m, but Fagor's bankruptcy has put an end to those plans. Other Asian giants such as Korea's Samsung and LG may also be interested in the Wrocław plant, especially since their current product range does not include stoves, dish-washers and top-loaded washing machines, popular in Europe. Poland is Europe's top producer of household appli-ances alongside Italy. A number of top global white goods makers, including Electrolux, Whirlpool, BSH, LG and Samsung, have established factories in

Poland. In 2013 production of large appliances rose 11% y/y reaching 17.6m units. Production of small ap-pliances dropped 8% y/y and totaled 5.5m units, ac-cording to industry think tank CECED.

BANKING & FINANCE

Regulator orders Regulator orders Regulator orders Regulator orders private equityprivate equityprivate equityprivate equity fund fund fund fund Abris to Abris to Abris to Abris to sellsellsellsell FM BankFM BankFM BankFM Bank

Polish financial regulator KNF ordered private equity fund Abris Capital Partners to sell its 99.6% stake in Poland's FM Bank PBP by the end of 2014. According to the regulator, Abris failed to meet certain conditions that the KNF had imposed on the investor, which in turn has a "negative effect on cautious and stable oper-ations of the bank." KNF has also blocked Abris-EMP Capital Partners Ltd. from exercising voting rights at FM Bank PBP until the sale is finalized. Despite the unprecedentedly drastic measure it applied to Abris, the watchdog failed to provide any further details of the case. "I can already say that we will appeal, because we see no grounds for such a decision by the KNF, especially since FM Bank PBP has better results than assumed in the financial plan and the regulator recently concluded that the bank's economic-financial condition did not constitute a threat to the safety of funds deposited at bank accounts," Paweł Boksa, partner at Abris and su-pervisory board VP at FM Bank told PAP agency. "We don't know what the charges are about," Boksa com-mented. "The KNF's decision is a huge surprise to us. We will decide on further steps after acquainting our-selves with the KNF's justification."


FM Bank PBP on its part has assured that the decision had no impact on its current operations, on the super-visory board or the management board, the bank commented in a press statement. "There are no reasons for concern related to the cur-rent situation and operations," the statement read. "FM Bank PBP is effectively implementing its devel-opment strategy and Q1 results are better than as-sumed," acting CEO Sławomir Lachowski was cited as saying. Lachowski is well respected as one of the most successful innovators of Poland's banking sector due to the key role he played in the creation of the im-mensely popular online bank mBank. FM Bank was established on the basis of Fundusz Mikro (Micro Fund), the leading Polish institution fi-nancing operations of microentrepreneurs. Besides Abris Capital Partners, the banks other shareholder is Piotr Stępniak, former CEO of Getin Holding. The Bank commenced operations at the beginning of March 2010 pursuant to the permission issued by the Financial Supervision Authority on 23 February 2010. FM Bank later merged with Polski Bank Przedsiębiorczości and since July 2013 it has been operating as FM Bank PBP. Abris representatives said last year their plan was to float the business on the Warsaw Stock Exchange in three years' time. FM Bank posted a net profit of PLN 10.1m in 2012 (against a PLN 8.2m loss in 2011). Its total assets stood at PLN 967m and PLN 517m, respectively. A more re-cent report, one that would illustrate the bank's situa-tion following the merger with PBP, has not been made available. FM Bank employed 521 persons.

BANKING & FINANCE

BZ WBK gets green BZ WBK gets green BZ WBK gets green BZ WBK gets green light to take over light to take over light to take over light to take over Santander ConsumSantander ConsumSantander ConsumSantander Consumer er er er

Poland's financial markets watchdog KNF has given bank BZ WBK a go ahead to take over a 60% stake in retail bank Santander Consumer Bank (SCB) from their joint Spanish parent Banco Santander, BZ WBK said in a market filing. Poland's third largest lender, the Warsaw-listed BZ WBK is to acquire San-tander's retail unit in a for-equity deal pricing SCB at PLN 2.16bn, the bank announced last November "With this transaction Banco Santander seeks to clari-fy the structure and operations of its subsidiaries in Poland by making SCB a direct subsidiary of BZ WBK. This was one of the promises we made when Banco Santander applied for permission to merge BZ WBK and Kredyt Bank. As a result, the combined assets of the BZK WBK group will increase to PLN 120bn, strengthening our position as Poland's third largest fi-nancial institution. Our combined customer numbers will come to 5.8m," said Artur Sikora, head of BZ WBK's communications and marketing department. At end-Q3 2013, SCB had PLN 13.77bn in assets, PLN 10.9bn in net loan portfolio, including PLN 5.3bn in mortgage loans, and PLN 6.83bn in deposits. Specializ-ing mainly in simple consumer finance products, such as car loans, as well as long-term deposits, SCM has 240 branches and 2,500 employees. Its C/I was at 46.5% in 1H 2013, whereas its Q1-Q3 profit came to PLN 290m. According to its 2013 report, the BZ WBK group post-ed attributable net earnings of PLN 1.98bn, up from

PLN 1.43bn in 2012. Its total assets rose from PLN 60bn in 2012 to more than PLN 106m as of end of 2013. BZ WBK used to be a highly profitable division of Al-lied Irish Banks (AIB). Squeezed by the financial cri-sis, the Irish ended up selling the Polish business to Spain's Santander, and the latter chose to merge it with Kredyt Bank, a Polish arm of Belgium's KBC which likewise pulled out of Poland by selling the local unit to the Spaniards. Consequently, in merely two years, Banco Santander has built a unit in Poland that is the third bank in terms of market share, with shares of 7.5% of loans and 8.7% of deposits, respectively. Bank Zachodni WBK Group has close to 890 branches, of which 370 came from Kredyt Bank, and about 4.1m customers, of which 3.8m are individuals, 274,500 are small or medium-sized enterprises 7,300 are corporate clients. Bringing SCB, its original Polish business, into the Group, seems like a natural move for Santander, and one that has long been anticipated by the market. Last year, Santander and KBC sold 21.4% of BZ WBK for PLN 4.89bn, increasing the bank's free float to ap-proximately 30%. Belgium's KBC sold its entire 16.17% stake for PLN 3.7bn, while Santander sold a 5.2% stake for PLN 1.19bn. Poland's financial regulator made re-turning BZ WBK to a significant free float of 25% a condition of its approval of the BZ WBK-Kredyt Bank merger.

BANKING & FINANCE

Irish export finance Irish export finance Irish export finance Irish export finance revolutionaries Aztec revolutionaries Aztec revolutionaries Aztec revolutionaries Aztec Money enter PolandMoney enter PolandMoney enter PolandMoney enter Poland

A Dublin-based international finance company Aztec Money officially inaugurated its entry into the Polish


market last month by taking part in the "CFO Forum – Irish Expertise in Finance Management" in Poland, an event organized by Enterprise Ireland and the CFO Club with the patronage of the Warsaw Stock Ex-change. Aztec Money is the trading name of Aztec Exchange Limited, which specializes in providing SMEs and corporates globally with access to a net-work of institutional investors interested in purchas-ing invoices and thereby providing instant cash flow. Set up last year by a team of international finance pro-fessionals, Aztec Money initially focused on Ireland, Spain, Italy and Greece for its product provision, after which it targeted Poland and Brazil. Launched June 2013, the Aztec Money platform links sellers of receiv-ables (corporates, SMEs and banks) to buyers (institu-tional investors, insurers, private wealth and banks). Suppliers can upload any invoices they wish to sell. Each supplier can request an advance of up to 99% of the face value of its invoices, with any remainder due to the supplier at final settlement (paid by the corpo-rate buyer). Prior to sale of its receivables, the supplier sets the financing fee it is willing to pay an investor for each 30-day period, typically 1% and 2%. "Aztec Money is the easiest, fastest and most secure way to access financing for any company without us-ing factoring, bank loans or Letter-of-Credit. Suppliers simply register and start selling invoices on terms they choose and watch bidders compete to buy. Aztec Money charges 1% to 2% for successfully completed transactions with no hidden charges," says Aztec Money Chief Operating Officer, Oliver Gabbay. "Investors on the Aztec platform focus on the compa-ny that owes the supplier payment via the invoice ra-ther than the credit quality of the supplier; investors have an exceptional amount of capital to invest in global invoices but the most significant restrictive fac-tor, until Aztec, was a single market place in which

they could compete to buy invoices instantly directly from suppliers," he explains. Aztec’s technology is deployable globally and available in over 20 languages, with support provided by local teams on the ground. To accommodate further growth, Aztec plans to open offices in the US and Asia within the next six months. Aztec currently has pro-cessing centers in Dublin (for EMEA) and New York (for the Americas) with one planned for Manila (for Asia Pacific). According to the company, it specifically addresses the shortage of capital faced by SMEs and corporations as a sustained European financial crisis and Basel III reforms restrict bank lending. Earlier this year, a number of hedge funds in the US, UK and Singapore signed agreements with Aztec Ex-change to purchase invoices from suppliers in emerg-ing markets and credit-constrained developed mar-kets. The deals capped off a successful first six months of operations for Aztec, which has registered over 300 suppliers to sell invoices on its platform since going live in June 2013 and has capacity for USD30bn of trade receivables annually. In addition, Aztec is en-gaged with a handful of global corporations to help their suppliers access working capital as part of sup-ply-chain financing programs. Aztec is also in early-stage conversations with banks about developing a trade receivable funding and referral program, where these institutions can route clients’ invoices to the Az-tec platform. Aztec points to the fact that Polish exports hit a record figure of over EUR 152bn in 2013 , surpassing imports for the first time in history. According to the compa-ny, the demand for foreign trade finance is greater than ever and Aztec believes that with its competitive advantages of flexibility and unlimited access to fi-nance it is well placed to help Polish exporters grow and expand into new territories. According to Aztec Exchange CEO Edwin Hagan-Emmin, Eurozone

SMEs and exporters in Spain, Poland, Ireland, Greece and Portugal continue to suffer significantly higher borrowing costs relative to German, Chinese or Amer-ican companies with significant economic conse-quences for competitiveness, GDP growth and jobs. Poland Today talks to: Olga Zarówny,Olga Zarówny,Olga Zarówny,Olga Zarówny, Associate, Business Development Poland at Aztec Money • PT: How many suppliers has Aztec Money signed to‐date globally and with what trade receivables ca-pacity annually? Olga Zarówny: Our trade capacity is as large as USD 30bn with unlimited access by our sellers. So far we have over 300 sellers registered on our Platform from Greece, Italy, Spain, Ireland, Morocco, Costa Rica, Egypt, Peru, Ghana, South Africa and Poland. • PT: Aztec has been scanning the Polish market since autumn last year. Have you signed any clients and/or partners here to‐date? OZ: Actually we started working actively in Poland at the end of 2013. We do have sellers from Poland on our platform and with our ongoing marketing cam-paign, every week we get at least three Polish sellers that want to register. In addition we are negotiating with potential partners that would help escalate our business in Poland. • PT: Why did Aztec focus on Poland as one of the first global markets to enter? OZ: We see great potential in Poland due to its grow-ing economy and exports. As we know growing export not necessary means that banks are responding to in-creasing demand for financing and that is where we want to find our clients. We feel that there are lots of exporters across the globe that have a great perspec-tive and ability to grow however financing and credit limits hold them back.


• PT: Which industries in Poland do you expect will yield the most clients for the Aztec Money platform and why? OZ: Aztec Money provides finance for all sectors. Based on our experience in other countries we noticed that food retail sector has been a motor to our registra-tions. Due to long payment terms by large retail chains suppliers and food producers use Aztec to unlock their cash flow. Furthermore manufacturing and textile in-dustries are also among our main sectors. • PT: What will be the make‐up of the Polish Aztec Money organization? Will you have any local pres-ence on‐the‐ground or is it all going to be handled via Dublin? OZ: At the moment we are running our main opera-tions from our headquarters in Dublin. However once Polish market grows an office in Poland will be opened. This is the strategy we implemented in Greece and Italy, where after successful market entry we de-cided that it would be much more efficient and con-venient for the platform users to run a local office. Please note that 85% of our operations are on line therefore we do not need to build large structure in every country.

ENERGY & RESOURCES

Government adopts Government adopts Government adopts Government adopts long awaited bill on long awaited bill on long awaited bill on long awaited bill on renewable energy renewable energy renewable energy renewable energy

Poland's government last week approved a long-awaited draft law that lays out new long-term subsi-dies for renewable energy, aiming to cut costs to con-sumers as well as help the coal-reliant country meet EU climate targets. The ministers have been working for nearly two years on a new legal framework for re-

newable energy sources (RES), causing growing frus-tration in the industry that craves regulatory stability. Poland generates around 90% of its electricity from coal and must increase renewable energy to at least 15% of the total by 2020 to meet EU rules on carbon emissions. The existing subsidy system will continue to apply to current renewable energy installations, while projects launched before January 1, 2015 will have to choose ei-ther the old or the new system, the Economy Ministry said in a statement. Installations launched or modern-ized beyond that date will be operating under the new subsidy system. According to the new bill, which requires final ap-proval by parliament and the president, developers and owners of new renewable installations can sell their energy at auctions, held at least once a year by market regulator URE, for a fixed price that would be guaranteed for 15 years regardless of market prices. The proposal would also set a ceiling on the subsidy. At least 25% of the volume of renewable energy pur-chased at auctions shall come from installations of in-stalled power of up to 1 MW, the statement reads. "The proposed solutions will bring about a radical change in the support scheme for RES in Poland. Alt-hough the RES industry is concerned about the scope of changes, it is currently difficult to accurately evalu-ate the government's proposition. Information regard-ing differences between reference prices for particular RES technologies will be of the significant importance in assessing if the support scheme is effective. Howev-er, there is no doubt that the intention is to decrease the level of state support for RES. The government es-timates that the total cost of the current support sys-tem would amount to approx. PLN 35-50bn until 2020, whereas the total cost of new support scheme would amount to approx. PLN 23-25bn at same period in time," Krzysztof Leśniak, associate at schoenherr,

one of CEE's leading corporate law firms, tells Poland Today "Moreover, legal and financial advice may be useful not only for new energy generators, but also for the ex-isting ones. This is because the owners of the currently operating installations will have to decide whether to use the amended version of the support scheme or move to the auction-based system," says Mr. Leśniak. In recent years, a number of investors put their re-newable energy projects in Poland on hold citing un-certain legal environment. The previous subsidy sys-tem did not provide long-term guarantees, and accord-ing to government estimates, its cost would rise to PLN 7.5-11.5bn a year by 2020.

Energy generation in Poland in 2012 By source, actual data

Other

2%

Gas

4%

Coal

84%

RES*

11%

Source: Economy Ministry *) renewable sources

In related news, Polish President Bronisław Komorowski signed into law a bill extending the sys-tem of support for high-efficiency cogeneration of power and heat for installations fired by coal and natu-ral gas to the end of 2018. The system of support forces energy traders to buy certificates of origin for a part of the volume of energy that has been produced in co-generation. If a given trader hasn't got a sufficient number of certificates, they have to pay a substitution fee. The system of support for cogeneration installa-


tions of below 1 MW capacity, fired by coal and natural gas, expired at end-2013.


Ukrainian investor to Ukrainian investor to Ukrainian investor to Ukrainian investor to build office project in build office project in build office project in build office project in downtown Warsawdowntown Warsawdowntown Warsawdowntown Warsaw

Ukrainian developer Wisher Enterprise seeks to break ground on a new office project in Warsaw's Wola district, at the corner of Grzybowska and Waliców Streets, approximately halfway between two of Warsaw's top hotels, the Westin and the Hilton. The construction is scheduled to begin either later this month or in early May 2014 with the expected delivery in late Q2 or early Q3 2015, said Cushman & Wake-field, which prepared the architectural design along with all the related technical documentation and co-ordinated the process of obtaining a building permit for the project. Located near the Mint of Poland, the thirteen-storey building will provide nearly 11,000 sq.m of leasable space will also offer four underground levels and 105 parking spaces. The main entrance to the building and the retail and service facilities will open onto Grzybowska Street. Each store on the ground floor will have a separate entrance. The general contractor is currently being selected for the new development which was designed by Cushman & Wakefield's archi-tects. "We wanted to combine the creativity of our designers with our extensive experience in property manage-ment and lease negotiation. As a result, we created a building which, we hope, will not only look superb, but will also offer efficiency to tenants," said Tomasz

Daniecki, Head of Project Management, Cushman & Wakefield. The Kiev-based Wisher Enterprise entered the Polish market with the mixed-use complex Silver Tower in Wrocław's Konstytucji 3 Maja Sq., close to the Wrocław Główny Railway Station, which will combine a hotel with 133 rooms , 7,215 sq.m GLA of offices, and 184 underground parking spaces. The 14-story project is currently under construction with completion ex-pected in September 2014.

Wisher Enterprise hopes to complete the Warsaw

Grzybowska project in mid-2015. Image: C&W

Although Cushman & Wakefield is best known as a re-al estate advisory firm, brokering some of the largest deals in Poland's property market, its project man-agement department provides also a wide range of technical consultancy services for commercial proper-ty tenants and developments, including architectural design services. The company coordinates the process of obtaining all the necessary administrative permits

and decisions and offers technical due diligence of buildings. Its portfolio of Polish projects includes the interior designs of Galeria Mazovia in Płock and the Millenium Hall shopping centre in Rzeszów, and the construction designs of Galeria Bursztynowa in Ostrołęka and Galeria Neptun in Starogard Gdański. The Project Management Department of Cushman & Wakefield’s Polish office is part of Cushman & Wake-field’s global Client Solutions Group with more than 5,000 employees worldwide.

Wrocław's Silver Tower is currently under con-

struction. Image: Mackow


Golub GetHouse pickGolub GetHouse pickGolub GetHouse pickGolub GetHouse pickssss contractor for Prime contractor for Prime contractor for Prime contractor for Prime Corporate CenterCorporate CenterCorporate CenterCorporate Center

Property company Golub GetHouse has awarded a PLN 115m contract for the construction of its flagship project Prime Corporate Center on 78 Grzybowska St.


in Warsaw to Warbud, the Polish arm of France's Vinci Group. The day the deal was signed, April 8, was also the official launch of the project which is to reach completion in January 2016. Prime Corporate Center was originally a brainchild of Irish developer Irlandzka Grupa Developerska (IGD), which got into financial difficulties and sold the site to the current owner, Golub GetHouse in 2012. Just recently, Golub GetHouse, a joint venture of US Golub & Company and Warsaw-based GetHouse Developer obtained EUR 50m financing for Prime Corporate Center from a consortium of mBank and mBank Hipoteczny, the highly successful Polish units of Germany's Commerzbank. Czarek Jarząbek, management board president at Golub GetHouse, told Poland Today that the total capex on the 20,000 sq.m GLA project would come to EUR 75m.

Prime Corporate Center (lower right hand corner)

is emerging in one of Warsaw's hottest office neigh-borhoods. Image: Golub GetHouse

The 23-floor Prime Corporate Center project will be located on Grzybowska Street in the Wola district of the Polish capital, close to the existing Hilton hotel and the Warsaw Spire office complex which is cur-

rently being developed by Ghelamco Poland. With a new subway line set to reach this area this year, the Wola-Śródmieście border will be a hotbed of office construction in the coming years. The Warsaw Spire investment alone will deliver 100,000 sq.m of new of-fice space there within the next two years, in this issue of BR+ we are covering another investment in the im-mediate vicinity (by Wisher Enterprise) with a com-bined GLA of more than 90,000 sq.m. "The site is ours by ownership, which guarantees that maintenance fees will be lower and stable over long term, unlike in developments where the investor only has perpetual usufruct rights to the land," said Mr. Jarząbek when asked about the key advantages of Golub GetHouse's project. Designed by the Solomon Cordwell Buenz and Ep-stein architectural studios, the scheme is expected to obtain BREEAM certification of energy efficiency and environmental performance. It offers column-free floor plates, floor to ceiling windows, rooftop terrace and comfortable driveway to main entrance. Golub GetHouse continues to look for land for new of-fice and residential schemes in Warsaw. "In December 2013 we acquired a site and signed a joint-venture agreement with Mennica Polska re-gard-ing a 1ha site on 21 Pereca Street, on the corner of Żelazna and Prosta. Together, we intend to build two class A-office buildings there, a 130m-tall tower with a GLA of 51,000 sq.m and a smaller building with 14,000 sq.m of office space," Czarek Jarząbek told Poland To-day back in January. Golub & Company has been present in the region since the early 90s and has completed a number of office schemes including the Warsaw Financial Centre (75,000 sq.m GLA), International Business Center (58,000 sq.m), and Warsaw Corporate Center (10,000

sq.m) as well as some residential projects (Point 48, Platinum Plaza, Oligo Park) in Warsaw and its envi-rons.


Kraków's tallest Kraków's tallest Kraków's tallest Kraków's tallest building to get new building to get new building to get new building to get new name and makeover name and makeover name and makeover name and makeover

Kraków's tallest building, known as Błękitek, is to get a full-scale makeover and rebranding that according to its owners will put the scheme back on the city's office property map. "Once the refurbishment works are completed, the building will offer both the highest quality office space and amazing views of the city to tenants looking for class A office space in the heart of Krakow. The build-ing will be significantly upgraded as modern technical solutions will be implemented. Flexible tenant ar-rangements will also be introduced," said Claudia Aus-ten, Head of Asset Management CEE in Pramerica Real Estate Investors, the building's owner. Centrally located by Rondo Grzegórzeckie and only 1.5km from the main railway station, the 76-m tall Błękitek has been a well known, even if not always loved, part of Kraków city's skyline thanks to its archi-tecture and blue color scheme. The address, at 1 Aleja Pokoju is convenient due to its proximity to the histor-ic centre of Kraków as well as the Galeria Kazmierz shopping mall, among other parts of the city. Following the refurbishment, Błękitek is to be intro-duced to the market in October as K1 with a total lease space of 12,800 sq.m. It will offer large floor plates of more than 2,000 sq.m per level in the Rotunda area as


well as small offices in its tower section. According to the owners, floor plates in the building are very flexi-ble allowing for multi-tenant use on one level.

K1 is the tallest building in Kraków. Image: JLL

"The refurbishment will put the building back on the Krakow office map making it one of the most interest-ing office locations in Kraków," said Christian Fojtl, Managing Director of WX Management Services (Warimpex Group), which manages the building.

SERVICES & BPO

US Convergys to create US Convergys to create US Convergys to create US Convergys to create 250 jobs at new contact 250 jobs at new contact 250 jobs at new contact 250 jobs at new contact center in Lublin center in Lublin center in Lublin center in Lublin

US customer management company Convergys Corporation will open a new contact center in the eastern Polish city of Lublin in May 2014, expecting to create approximately 250 new jobs by the end of the year. The new facility will be located at the Lublin Nord Office Park, which is currently in final stages of

construction. The company has already begun hiring for the first wave of positions to support the opening of the facility. "Convergys is excited about the opportunity to grow its business in Poland and the Lublin expansion is a re-flection of our commitment to Poland and reflects the positive experience we have of the highly skilled, hard working and motivated workforce within our site in Szczecin," Cormac Twomey, Convergys Managing Di-rector for EMEA, tells Poland Today. Convergys has recently acquired a facility in Szczecin as part of its March 3, 2014 takeover of Stream Glob-al Services. Stream has had a longstanding presence in Poland and the former Stream facility in Szczecin will continue operations, serving multiple clients as Convergys.

From the left: Michael Havas, Vice President Custom-er Service at Telefónica Germany, Cormac Twomey, Managing Director EMEA, Convergys, Krzysztof Żuk, Mayor of Lublin. Image: ACG

"Szczecin has in excess of 300 employees and we sup-port Polish, Russian, and Germany languages from that location currently but Szczecin has the ability to sup-

port many other languages. We are very committed to Poland as we believe Poland provides a highly skilled, hard working and very motivated workforce that we have proven delivers high quality results for our cli-ents," Mr. Twomey says. Convergys has recently signed a new contract with a major European wireless telecommunications provid-er, Spain's Telefonica, for whose Germans-speaking clients the company will provide customer support from the new site in Lublin. In addition, Convergys will work closely with its telecommunications client to identify and implement service innovations to help enhance customer satisfaction and the overall custom-er experience, the company said "At present our focus is on our German telecoms client as this is a significant commitment to a large number of jobs to support them. As a business we are always looking to grow and add new clients," adds Cormac Twomey. With more than 150 locations and 125,000 employees around the globe, Convergys delivers services that in-clude customer care, analytics, tech support, collec-tions, home agent, and end-to-end selling in 47 lan-guages. Based in Cincinnati, Ohio, the company posted net earnings of USD 60.9m on USD 2.05bn turnover last year. "Lublin is seeing dynamic development. It is con-firmed by the latest Cities and Regions of the Future ranking by fDI Magazine where Lublin was listed as one of 10 cities in CEE with the best foreign direct in-vestment strategy. The new Convergys investment is another proof of our credibility," said Krzysztof Żuk, the Mayor of Lublin.



Ryanair to oRyanair to oRyanair to oRyanair to open bases pen bases pen bases pen bases in Gdańsk and Modlin in Gdańsk and Modlin in Gdańsk and Modlin in Gdańsk and Modlin this year this year this year this year

Irish low cost carrier Ryanair announced last week it would open its 3rd Polish base at Gdańsk in October 2014 with one based aircraft and 3 new winter routes to Birmingham, Leeds Bradford and Warsaw Modlin (10 in total), which will deliver 700,000 customers with 94 weekly flights (up from the current 54). Ac-cording to Ryanair,, their new base will sustain some 700 "on-site" jobs, as the airline invests over USD 90m at Gdańsk Airport. The decision is likely to strengthen Ryanair's top position on the Polish market. Also in winter this year, as confirmed last week, Rynair is to open its 2nd Polish base at Warsaw Modlin, and four new winter routes from Warsaw to Gdańsk, Madrid, Shannon and Wrocław (20 in total). In terms of capex, the Modlin project will be of similar value, but the airline expects to deliver 1.9m customers a year and sustain some 1,900 “on-site” jobs, with 268 weekly flights. Ryanair beat flagship Polish carrier LOT last year, be-coming the number one passenger airline on the local market. According to data provided by the aviation watchdog ULC, Ryanair carried 6.585m passengers in 2013, nearly 2m more than in 2012, which translates into a 30% share in flights to and from Poland. Its main competitor LOT welcomed aboard only 5.858 passengers, some 317,000 fewer than in the prior year, even though the market expanded by 763,000 passen-gers, reaching nearly 22m. LOT's market share dropped below 27% last year from over 29% in 2012.

The Polish airline is currently struggling to keep its head above water, after requesting PLN 400m worth of public aid in 2012 in order to avoid bankruptcy. The EU has permitted Poland to inject up to PLN 781m in-to the company as long as the latter implements a dras-tic cost cutting program that involves the closure of many routes and group layoffs. So far, LOT has not asked for the remainder of the public aid, but the cost cutting measures continue to undermine its market position, and create new opportunities for rivals such as Ryanair. On the plus side, however, as a result of the restructuring, in 2013 LOT posted its first net profit in five years (see BR+ No. 029 page 9).

Ryanair is Poland's top airline Passengers on routes to and from Poland incl. domestic, in million

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

KLM

Air France

SAS

Norwegian

EasyJet

Lufthansa

WizzAir

LOT*

Ryanair

2013

2012

Source: ULC *) including Eurolot

The Irish carrier owes much of its remarkable growth in Poland to the launch of flights from to Warsaw's newly opened Modlin airport. Following Modlin's temporary closure in December 2012, Ryanair relocat-ed to Warsaw's main Chopin airport, but a few weeks ago the airline moved back to Modlin, from where it flies to 30 European destinations. Starting from this year the airline will be flying also on domestic routes, from Modlin to Gdańsk and Wrocław, further under-mining LOT's already weak position.

Ryanair has taken Poland's air travel market by a

storm. Photo: Ryanair

Hungary's WizzAir ranked as number three in 2013, with 4.06m passengers, which represents a decline by 127,000, and a market share of 18.5%. WizzAir has tak-en the place of Germany's Lufthansa, which came 4th with 1.5m passengers and a 6.9% share in flights to and from Poland. Of remaining airlines only EasyJet had more than a 2% share in the Polish passenger aviation market. Overall, low cost carriers had a 54.1% market share last year, up from 47.5% in 2012.



Another speculative Another speculative Another speculative Another speculative project from Prologis project from Prologis project from Prologis project from Prologis in Wrocław regionin Wrocław regionin Wrocław regionin Wrocław region

Merely two weeks after US industrial space developer Prologis broke ground on a 27,000 sq.m speculative project in the Wrocław area, the company has an-nounced another large investment in the area. The company has just commenced the construction of a 18,240 sq.m of class-A logistics space at Prologis Park Wrocław III, one of several sites Prologis owns in the region. The building, which is to reach completion in Q3 2014 as the last one in Prologis Park Wrocław III, is nearly 40% pre-leased at the moment. "For several months, demand for modern logistics space in the Wrocław region has been growing," said Ewa Zawadzka, vice president, head of development, Prologis Poland. "This facility has the unique capabil-ity to meet the needs of both large and small compa-nies needing top-quality, customizable space." Tenants can rent units as small as 650 sq.m, and the availability of small, Class-A units with loading docks and level access gates what was convinced Metalcom, a supplier of fasteners, anchoring solutions and non-standard fastening products, to book 1,300 sq.m in the new building. Another prospective tenant is Poland's top pharma distributor Neuca, which will occupy 5,500 sq.m in the scheme. Prologis Park Wrocław III is situated 7km southeast of Wrocław, at the Wrocław ring road at Graniczna St., 3.5km from the city’s airport. The 130,000-sq.m distri-bution park is 91% occupied.

Other ongoing projects from Prologis in Poland in-clude a 11,200 sq.m BTS scheme for Danish forwarder Prime Cargo in Prologis Park Szczecin as well as a 27,000 sq.m speculative development in Prologis Park Wrocław V.

Following completion of the new unit, Prologis Park

Wrocław II will be fully built-up. Image: Prologis

As of December 31, 2013, Prologis owned or had in-vestments in, properties and development projects of approximately 52.9m sq.m in 21 countries, including 3.6m in the CEE region. Last year alone, the company leased 1.15m sq.m of industrial distribution space in Central and Eastern Europe, including 595,000 sq.m in renewals and 363,000 sq.m in new leases. Prologis’ occupancy in the CEE was 89.5% as of Dec. 31, 2013. Wrocław is one of Poland's fastest growing warehouse markets. According to property consultancy Cush-man & Wakefield, the region's total industrial space stock is bound to exceed 1m sq.m this year, up from 780,000 sq.m as of end of 2013. Some 259,000 sq.m is under construction with the largest project underway being BTS Amazon (123,000 sq.m) developed as part of Goodman Wrocław South Logistics Centre. Head-line rents remain stable at EUR 3.0–3.9/sq.m/month.

"Wrocław's location in the heart of Central Europe, with its proximity to Germany and the Czech Repub-lic, makes the area an increasingly popular warehouse location for companies providing cross-border logis-tics services. This has been fostered by the gradual de-velopment of the road network," says Michał Śniadała, Senior Consultant, Industrial Agency, at JLL.


Alstom's Alstom's Alstom's Alstom's contracts incontracts incontracts incontracts in Budapest and Germany Budapest and Germany Budapest and Germany Budapest and Germany good news for Polandgood news for Polandgood news for Polandgood news for Poland----based based based based train train train train productionproductionproductionproduction

Underground trains from the transport arm of French conglomerate Alstom were put into service on Cen-tral and Eastern Europe's first automated under-ground line in Budapest March 28. The 15 trains which were exported to Hungary by Alstom were as-sembled in Chorzów, near Katowice, and consist of new 80m long Metropolis trains with five cars which can carry up to 810 people, including 164 seated pas-sengers. The trains now operate on the Budapest un-derground line 4- a 7.4km line connecting two stations from the western and eastern parts of the city from which Budapest gets its name: the Kelenföld Inter-modal Station in Buda and the Keleti Eastern Railway Station in Pest. Initially, the trains will be operated by machinists in temporary cabs. After a year, the company plans to remove the dividing wall between the cabs and the rest of the train- resulting in the trains being com-pletely unmanned. Senior Vice President of Alstom Europe, Andreas Knitter, said that his company was "very proud" to deliver the automated underground


trains to Budapest and that the move showed "exper-tise in conceiving metros for any type of configuration, depending on the requirements of the customer." The unmanned underground trains are not the only ones that Alstom is exporting for use in Budapest's 118 year old underground train system, with another 25 manned Metropolis trains being sent to replace the city's Line 2. Alstom's success with its underground trains is matched with its successful contracts for regional trains, which are manufactured in Chorzów near Ka-towice as well as Salzgitter, Germany. In 2011, Alstom signed a EUR 25m contract with Germany's Lower Saxony region's transit authority, LNVG, to which it will supply 6 of its Coradia Lint regional trains to begin operations in 2016. Another EUR 150m contract signed with Germany's Verkehrsverbund Mittelsachsen GmbH (VMS) in Central Saxony aims to supply 29 of Alstom's Coradia Continental electric trains to the region by June 2016. The continued exportation of Alstom's trains is good news for Poland, where much of the company's pro-duction is based. Alstom's presence in Poland is not limited to its factory in Chorzów, with the French conglomerate possessing facilities all over the country. Most Alstom's remaining Polish factories, located in Elbląg, Szczecin, Warsaw, Łódź, Wrocław, Świebodzice, Chorzów, Katowice, and Kraków, manu-facture supply the energy generation sector as part of the company's Alstom Power division, which employs close to 2,200 people in the country. In 2012 Alstom Power's Polish arm turned over PLN 2.4bn and posted a net loss of PLN 41.4m.

RETAIL PROPERTIES

Three new shopping Three new shopping Three new shopping Three new shopping centers opencenters opencenters opencenters openedededed in Q1, in Q1, in Q1, in Q1, further 550,000 sq.m ifurther 550,000 sq.m ifurther 550,000 sq.m ifurther 550,000 sq.m is s s s under constructionunder constructionunder constructionunder construction

Poland's shopping centre stock came to 8.6m sq.m as of end of Q1, following the opening of three new prop-erties with a combined GLA of 140,500 sq.m in the first three months of 2014. According to property con-sultancy JLL, this brings the shopping centre density in Poland up to 224 sq.m / 1,000 inhabitants, above the European average of 191 sq.m / 1,000 citizens. The three new centers opened in Q1 were Atrium Felicity in Lublin, Galeria Amber in Kalisz and Galeria Siedlce in Siedlce. Other retail formats operating on the on the Polish market include: retail parks (1.3m sq.m), re-tail warehouses (1.87m sq.m) and outlet centers (163,000 sq.m). Construction activity remains reasonably high, with nearly 550,000 sq.m of new floor space of various types expected to be delivered to the market. Shopping centers account for most of the pipeline supply (87%), followed by retail parks (11%) and one outlet centre. 20 shopping centers are at the construction stage, includ-ing Sukcesja in Łódź (45,000 sq.m), Galeria Warmińska in Olsztyn (41,500 sq.m) and Tarasy Zamkowe in Lublin (38,000 sq.m), and a further eight properties are being extended. JLL points out that the growth in retail supply will be most pronounced in the eastern, north-eastern and central (Łódź region) parts of Poland, and in towns with less than 100,000 inhab-itants. With regards to the size of future projects, me-dium and small schemes will very much dominate fu-ture openings (98%).

"The Polish retail market develops in a more balanced way as the previously less active locations expand their retail offer. Convenience-based schemes, both shopping centers and retail parks, are arriving in smaller markets with development opportunities. 42% of shopping centre and 87% of retail park stock is cur-rently being constructed in cities of below 100,000 residents," says Anna Wysocka, Head of Retail Agency Poland, JLL. Despite encouraging signals from the economy, retail-ers remain cautious towards new openings and take their time to carefully examine all opportunities. Prime assets continue to attract most retailer demand, while landlords of centers perceived as secondary or those located in very competitive markets are facing downward pressures on rents, says JLL. The ongoing withdrawal of several retail chains (e.g. Charles Voegele, Marrionaud, Jackpot & Cottonfield) from the Polish market is creating opportunities for property managers to refresh their tenant mix. "We observe Polish companies, including well-known and popular brands from LPP's portfolio, CCC, Top Secret or Coccodrillo, expanding outside of Poland. The typical direction for international expansion of the Polish chains are: Czech Republic, Slovakia, Russia and Hungary," Anna Wysocka added. The average retail vacancy rate in major agglomera-tions was 3.2%, at the end of 2013, up by 0.6 percent-age points when compared to a year earlier. According to JLL, prime rents will remain stable in the short to mid-tem. The highest prime rents for a prominently located 100 sq.m unit shop from the fashion category in leading shopping centers are led by Warsaw (EUR 85–100/sq.m/month), Wrocław (EUR 47-55/sq.m/month), Łódź (EUR 50-55/sq.m/month) and the Katowice metropolitan area (EUR 42-55/sq.m/month).


According to JLL, the overall investment market sen-timent is positive in the retail sector, and the consul-tancy expects this year's volume to match or exceed the 2013 result of EUR 1.4bn. In Q1 2014 TriGranit Development, Europa Capital and Polish State Railways sold their Poznań City Center project to a consortium set up by Resolution and ECE Fund, for an undisclosed amount, in what is likely to be one of the largest retail deals this year.

IT & TELECOM

HP owns up to major HP owns up to major HP owns up to major HP owns up to major corruption in Polandcorruption in Polandcorruption in Polandcorruption in Poland, , , , pays fine in the USpays fine in the USpays fine in the USpays fine in the US

IT giant Hewlett-Packard (HP) is to pay US regula-tors USD 108m to settle a corruption scandal involving employees at subsidiaries in three countries, including Poland, who were charged with bribing government officials to win and retain lucrative public contracts. Corruption was unearthed in relation to contracts worth USD 40m to install IT equipment at the nation-al police headquarters in Poland, USD 35m of work for government prosecutors in Russia, and a deal to sup-ply Mexico's state-owned petroleum company. "According to an agreed statement of facts, in Poland, from 2006 through at least 2010, HP Poland falsified HP books and records and circumvented HP internal controls to execute and conceal a scheme to corruptly secure and maintain millions of dollars in technology contracts with the Komenda Główna Policji (KGP), the Polish National Police agency. HP Poland made corrupt payments totaling more than USD 600,000 in the form of cash bribes and gifts, travel, and enter-tainment to the KGP’s Director of Information and

Communications Technology," the U.S. Federal Bu-reau of Investigation (FBI) said in a statement. In Poland, prosecutors last week charged the former HP executive, named in accordance with local law on-ly as Tomasz Z., as well as Andrzej M. , the corrupt of-ficial, who is being accused of accepting bribes in ex-change for giving favorable treatment for firms, in-cluding HP, which were bidding for IT contracts with the police headquarters that were worth a total of USD 39.71m, Zbigniew Jaskólski, a spokesman for the Ap-pellate Prosecutors' office in Warsaw, told Reuters. The FBI provided more juicy details of their dealings: "Among other things, HP Poland gave the government official bags filled with hundreds of thousands of dol-lars of cash; provided the official with HP desktop and laptop computers, mobile devices, and other products; and took the official on a leisure trip to Las Vegas, which included drinks, dining, entertainment, and a private tour flight over the Grand Canyon. To covertly communicate with the official about the corrupt scheme, an HP Poland executive used anonymous e-mail accounts, prepaid mobile telephones, and other methods meant to evade detection." The former HP executive also promised the same offi-cial a bribe worth USD 827,400 in exchange for in-cluding in the tender documents provisions which fa-vored bidders designated by the executive, Jaskólski said. Both the former executive and the former official have been charged with offenses which carry prison sentences of between two and 12 years, he added. Poland has been pursuing allegations of corruption against a group of multinational IT companies, cover-ing a period from 2007 to 2009. The probe is now drawing to a head, with officials saying last week that 41 people, including IT company executives, govern-ment officials and former police officers, had been charged with almost 70 offences.

The interior minister, Bartłomiej Sienkiewicz, took to the radio to hail a "breakthrough moment in Poland when a great international company acknowledges its corrupt activities in Poland". The minister said Poland had cooperated on the investigation with the FBI and the Securities and Exchange Commission (SEC). The HP investigation is part of a wide-ranging probe by US regulators a into the behavior of US IT compa-nies abroad. IBM said last year it was under investiga-tion in Poland and four other countries, and the com-pany paid USD 10m, also in 2013, to settle a corruption case involving China and South Korea. Cisco said last month the company and its resellers in Russia, eastern Europe and central Asia are being investigated. The US Foreign Corrupt Practices Act makes it illegal for US companies to pay bribes to officials with foreign governments to win business. Firms found to have vio-lated the act have in the past been ordered to pay mul-ti-million-dollar settlements.

FRESH DATA: UNEMPLOYMENT Polish registered unemployment came down to 13.6%

in March from 13.9% in February according to Labor

Ministry’ estimates. At-end March, the jobless count

was at 2.184m persons, down by 72,000 m/m. Em-

ployers filed 107,000 job offers in March, up by 18,000

y/y. "Everything suggests that the 13% year-end target

is increasingly realistic," Labor Minister Władysław

Kosiniak-Kamysz said in a comment to the estimates.

Poland's unemployment rate in February declined to

13.9% from 14% in January, latest official data by the

Central Statistical Office (GUS) show.

Source: GUS


KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

Data in (%) Nov '13 Dec '13 Jan '14 Feb '14

Sector y/y m/m y/y m/m y/y m/m y/y m/m

Food & bev +1.9 +0.3 +1.5 +0.7 +1.8 +1.6 +1.6 -0.2

Alcohol, tobacco +3.6 +0.1 +3.7 0.0 +3.4 +0.8 +2.2 +1.4

Clothing, shoes -4.9 -0.2 -4.9 -0.6 -5.0 -3.7 -4.7 -1.7

Housing +1.8 +0.1 +1.8 0.0 +1.9 +0.2 +1.9 +0.1

Transport -2.3 -1.2 -0.9 0.4 -1.2 -1.5 -1.1 +0.4

Communications -11.7 -4.9 -11.6 0.0 -7.8 -0.3 -3.2 +0.4

Gross CPI +0.6 -0.2 +0.7 +0.1 +0.5 +0.1 +0.7 +0.1

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

Feb 12

Apr 12

Jun 12

Aug 12

Oct 12

Dec 12

Feb 13

Apr 13

Jun 13

Aug 13

Oct 13

Dec 13

Feb 14

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month Oct '13 Nov '13 Dec '13 Jan '14 Feb '14

m/m (%) +3.6 -5.8 +17.3 -21.3 -0.6

y/y (%) +3.2 +3.8 +5.8 +4.8 +7.0

Year 2009 2010 2011 2012 2013

Turnover in PLNbn 582.8 593.0 646.1 676.0 n/a

y/y (%) +4.3 +5.5 +11.6 +5.6 +2.3

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2009 2010 2011 2012 2013 Jan-Feb

2014

y/y

(%)

Permits 178.8 174.9 184.1 165.1 138.7 18.4 +0.8

Commenced 142.9 158.1 162.2 141.8 127.4 16.5 +56.4

U. construction 670.3 692.7 723.0 713.1 694.0 687.5 -1.5

Completed 160.0 135.7 131.7 152.5 146.1 23.7 -4.9

Source: Central Statistical Office (GUS)

GGGGross Domestic Productross Domestic Productross Domestic Productross Domestic Product

Period Growth y/y unadjusted

GDP in PLN bn current prices

Current account def. in % of GDP

Q4 2013 +2.7% 442,167 -1.5%

Q3 2013 +1.9% 393,725 -1.9%

Q2 2013 +0.8% 389,244 -2.3%

Q1 2013 +0.5% 370,089 -3.1%

2013 +1.6% 1,635,746 -1.5%

2012 +1.9% 1,596,379 -3.7%

2011 +4.5% 1,528,127 -5.0%

2010 +3.9% 1,416,585 -5.1%

Key Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & Projections

Indicator 2010 2011 2012 2013 *2014

GDP change +3.9% +4.5% +1.9% +1.6% +3.5%

Consumer inflation +2.6% +4.3% +3.7% +0.9% +1.0%

Producer inflation +2.1% +7.6% +3.4% -1.3% -1.4%

CA balance, % of GDP -5.1% -5.0% -3.7% -1.3% -0.7%

Nominal gross wage +3.9% +5.2% +3.7% +3.4% +4.4%

Unemployment** 12.4% 12.5% 13.4% 13.4% 12.4%

EUR/PLN 3.99 4.12 4.19 4.20 4.09

Sources: NBP, BZ WBK, GUS *) projections **) year-end

Gross WagesGross WagesGross WagesGross Wages A: avg monthly wages in PLN B: indexed avg wages, 100=2005

Sector Q4 2012 Q1 2013 Q2 2013 Q3 2013

A B A B A B A B

Coal mining 8,427 192 6,060 138 6,290 143 6,061 138

Manufacturing 3,522 154 3,491 152 3,560 155 3,625 158

Energy 6,535 198 6,196 188 5,828 177 6,021 183

Construction 3,829 163 3,556 152 3,693 157 3,766 160

Retail & repairs 3,365 143 3,432 146 3,421 146 3,408 145

Transportation 3,816 135 3,439 122 3,547 125 3,589 127

IT, telecoms 6,379 166 6,685 174 6,707 174 6,654 173

Financial sector 6,044 136 6,356 143 6,702 151 6,109 137

National average 3,878 154 3,741 149 3,613 144 3,652 145

Source: Central Statistical Office (GUS)

Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14

m/m (%) -0.8 +9.4 +14.3 -2.9 +21.5 -64.0 +18.7

y/y (%) -11.1 -4.8 -3.2 -8.9 +5.8 -3.9 +14.4

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +15.5 +12.1 +5.1 +4.6 +11.8 -0.6 -12.0

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

Jun 11

Sep 11

Dec 11

Mar 12

Jun 12

Sep

12

Dec 12

Mar 13

Jun 13

Sep 13

Dec 13

Mar 14

60

80

100

120 Co nsumer confidence (left axis)

Economic sentiment (right axis)

The economic sentiment (1990-2010 average = 100) is a composite made up of 5 sectoral confidence indicators, which are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable. Source: Eurostat

Producer PriceProducer PriceProducer PriceProducer Pricessss

Month Aug'13 Sep'13 Oct'13 Nov'13 Dec'13 Jan'14 Feb'14

m/m (%) -0.3 +0.1 -0.7 -0.3 -0.1 0.0 -0.1

y/y (%) -1.1 -1.4 -1.4 -1.5 -1.0 -1.0 -1.4

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +2.0 +2.2 +3.4 +2.1 +7.6 +3.3 -1.3

Construction PriceConstruction PriceConstruction PriceConstruction Pricessss

Month Aug'13 Sep'13 Oct'13 Nov'13 Dec'13 Jan'14 Feb'14

m/m (%) -0.2 -0.1 -0.1 -0.1 -0.1 -0.2 -0.2

y/y (%) -1.9 -1.8 -1.8 -1.7 -1.7 -1.7 -1.6

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +7.4 +4.8 +0.2 -0.1 +1.0 +0.2 -1.8

Industrial OutpuIndustrial OutpuIndustrial OutpuIndustrial Outputttt

Month Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14

m/m (%) -4.5 +9.6 +6.0 -6.2 -9.7 +2.9 -1.8

y/y (%) +2.2 +6.2 +4.4 +2.9 +6.6 +4.1 +5.3

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +10.7 +3.6 -3.5 +9.8 +7.7 +1.0 +2.2


TTTTraderaderaderade

Poland exports and imports according to commodity groups, according to SITC classification

EXPORTS in PLN bn IMPORTS in PLN bn

Jan 2014 y/y (%)

share (%)

2013 share (%)

Jan 2014 y/y (%)

share (%)

2013 share (%)

Food and live animals 5,692 +4.4 10.6 69,304 10.9 4,066 +3.5 7.6 47,906 7.4

Beverages and tobacco 599 -8.0 1.1 8,624 1.4 275 -17.9 0.5 4,150 0.6

Crude materials except fuels 1,547 +4.9 2.9 15,744 2.5 1,908 +0.9 3.6 21,585 3.3

Fuels etc 2,713 +5.4 5.0 30,013 4.7 7,191 +17.7 13.5 75,539 11.7

Animal and vegetable oils 176 +56.6 0.3 1,864 0.2 187 -15.3 0.4 2,646 0.4

Chemical products 4,833 +7.8 9.0 59,103 9.3 7,585 +0.3 14.3 92,917 14.3

Manufactured goods by material 10,662 +2.5 19.8 129,915 20.3 9,221 +3.7 17.3 112,392 17.3

Machinery, transport equip. 20,448 +14.8 37.9 239,434 37.5 16.711 +3.0 31.4 216,608 33.4

Other manufactured articles 7,198 +8.1 13.3 82,816 13.0 4,685 +1.1 8.8 58,210 9.0

Not classified 94 n/a 0.1 1,782 0.2 18,091 n/a n/a 16,242 2.6

TOTAL 53,962 +8.4 100 638,599 100 53,226 0.0 100 648,195 100

Poland's ten largest trading partners, ranked according to 2013

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan-Feb 2014

share *2013 share No Country Jan-Feb 2014

share *2013 share

1 Germany 27,115 25.7% 159,622 25.0% 1 Germany 22,514 21.4% 139,334 21.5%

2 UK 6,789 6.4% 41,503 6.5% 2 Russia 13,686 13.0% 79,601 12.3%

3 Czech Rep. 6,597 6.3% 39,421 6.2% 3 China 10,644 10.1% 60,914 9.4%

4 France 6,453 6.1% 35,745 5.6% 4 Italy 5,067 4.8% 33,703 5.2%

5 Russia 4,684 4.4% 34,058 5.3% 5 Netherlands 3,799 3.6% 25,005 3.9%

6 Italy 4,759 4.5% 27,450 4.3% 6 France 4,086 3.9% 24,533 3.8%

7 Netherlands 4,217 4.0% 25,292 4.0% 7 Czech Rep. 3,674 3.5% 23,778 3.7%

8 Ukraine n/a n/a 18,037 2.8% 8 USA 2,399 2.3% 17,350 2.7%

9 Sweden 3,186 3.0% 17,498 2.7% 9 UK 2,782 2.6% 16,861 2.6%

10 Slovakia 2,616 2.5% 16,795 2.6% 10 Belgium 2,645 2.5% 14,913 2.3%

Source: Central Statistical Office (GUS) *) preliminary estimates

CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 11 April 2014

100 USD 300.86 ↓

100 EUR 417.84 ↑

100 GBP 504.52 ↑

100 CHF 343.43 ↑

100 DKK 55.96 ↑

100 SEK 46.01 ↓

100 NOK 50.65 ↓

10,000 JPY 295.90 ↑

100 CZK 15.23 ↑

10,000 HUF 136.57 ↑

100 USD/EUR against PLN

300

350

400

450

26 A

pr 13

8 Jul 13

13 Sep 13

22 N

ov 13

4 Feb 14

11 A

pr 14

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m Nov '13 Dec '13 Jan '14 Feb '14

Monetary base 153,672 164,010 161,544 158,330

M1 538,837 555,851 546,487 548,033

- Currency outside banks 113,718 114,401 113,455 114,680

M2 934,713 960,361 947,443 954,284

- Time deposits 412,469 421,160 418,259 423,296

M3 953,446 978,924 962,416 968,442

- Net foreign assets 148,702 143,430 140,617 135,759 Monetary base: Polish currency emitted by the central bank and money on accounts held with it. M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) M3= the broad measure of money supply Source: NBP

CCCCreditreditreditredit

The financial sector's net lending in PLN bn,

loan stock at the end of period

Type of loan Nov '13 Dec '13 Jan '14 Feb '14

Loans to customers 906,298 903,890 914,189 914,068

- to private companies 262,396 259,061 263,063 263,941

- to households 563,157 562,381 567,984 567,257

Total assets of banks 1,627,119 1,601,293 1,628,197 1,616,891

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Sep '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14

PLN (up to 1 year) 4.5% 4.5% 4.5% 4.3% 4.2% 4.5%

PLN (up to 5 y ) 4.9% 4.9% 4.9% 4.9% 4.9% 4.8%

PLN (over 5 y) 4.8% 4.8% 4.8% 4.7% 4.8% 4.7%

PLN (total) 4.8% 4.8% 4.8% 4.7% 4.8% 4.7%

EUR (up to 1m EUR) 1.8% 2.0% 1.9% 1.9% 2.0% 2.0%

EUR (over 1m EUR) 3.2% 2.5% 3.0% 2.9% 3.6% 3.4%

Warsaw Inter Bank Offered Rate (WIBOR) as of 11 Apr 2014

Overnight 1 week 1 month 3 months 6 months

2.59%% 2.60% 2.62% 2.72% 2.74%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.59% 4.00% 1.00% 2.75%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 11 Apr '14

Change 4 Apr '14

Change end of '13

↓ Alior Bank 82 -6% +1%

↓ Asseco Pol. 45.58 -2% -1%

↓ Bogdanka 122.95 -2% -2%

↓ BZ WBK 400.95 -3% +3%

→ Eurocash 38.7 0% -19%

↑ Grupa Lotos 38.9 +3% +10%

↓ JSW 43.99 -6% -17%

→ Kernel 31.3 0% -18%

↑ KGHM 115.2 +8% -2%

↓ LPP 8325 -4% -8%

↓ mBank 519 -3% +4%

↑ Orange Pol. 10.5 +3% +7%

→ Pekao 198 0% +10%

↓ PGE 19.6 -2% +20%

→ PGNiG 4.36 0% -15%

↑ PKN Orlen 44.5 +3% +9%

→ PKO BP 42.5 0% +8%

↓ PZU 427 -1% -5%

↑ Synthos 5.15 +2% -6%

↓ Tauron 5.06 -3% +16%

Source: Warsaw Stock Exchange

Key indices

as of 11 April 2014

WIG Total index

55552222,,,,389389389389....75757575 Change 1 week -1% ↓

Change end of '13 +2% ↑

WIG-20 blue chip index

2,2,2,2,444464646464....12121212 Change 1 week 0% →

Change end of '13 +3% ↑

WIG Total closing index

last three months

49,000

50,000

51,000

52,000

53,000

54,000

55,000

13 Jan 14

4 Feb 14

26 Feb 14

20 M

ar 14

11 A

pr 14


Poland Today Sp. z o. o.

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00–819 Warsaw, Poland

tel/fax: +48 22 464 82 69

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Publisher Richard Stephens

Financial Director Arkadiusz Jamski

Creative Director Bartosz Stefaniak

New Business Consultant

Tomasz Andryszczyk

RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan-Feb 2014 *

Monthly wages (PLN)

Jan-Feb 2014**

Unemploy-ment

Feb 2014

New dwellings Jan-Feb 2014

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 100.8 103.3 4,061 3,663 160.5 13.7 2,682 99.3

Kujawsko-Pomorskie (Bydgoszcz) 108.6 112.9 3,324 3,132 157.0 18.8 1,116 86.7

Lubelskie (Lublin) 106.8 80.0 3,801 2,996 140.1 15.0 729 73.6

Lubuskie (Zielona Góra) 118.5 105.2 3,397 2,964 62.6 16.3 596 86.0

Łódzkie (Łódź) 102.6 110.1 3,686 3,110 158.9 14.6 1,111 108.5

Małopolskie (Kraków) 95.6 97.0 3,659 3,286 172.4 12.1 2,570 77.7

Mazowieckie (Warszawa) 107.2 100.0 4,457 4,793 295.4 11.4 5,028 107.3

Opolskie (Opole) 105.5 145.9 3,481 3,449 54.3 14.9 332 100.6

Podkarpackie (Rzeszów) 104.8 120.3 3,347 2,991 160.3 16.9 1,105 117.3

Podlaskie (Białystok) 106.1 118.8 3,207 3,666 73.4 15.5 564 120.5

Pomorskie (Gdańsk-Gdynia) 105.9 101.2 3,866 3,415 120.0 13.9 1,312 66.5

Śląskie (Katowice) 100.5 108.9 4,708 3,460 218.3 11.7 1,681 93.0

Świętokrzyskie (Kielce) 115.1 62.6 3,325 3,150 94.3 17.1 524 133.7

Warmińsko-Mazurskie (Olsztyn) 105.6 129.7 3,295 2,950 120.4 22.3 956 116.9

Wielkopolskie (Poznań) 110.3 93.2 3,685 3,593 152.6 10.0 2,437 103.6

Zachodniopomorskie (Szczecin) 113.0 87.0 3,418 3,332 115.5 18.5 965 82.8

National average 104.7 101.1 3,930 3,967 2,255.9 13.9 23,708 95.1

*) Index 100 = same period of the previous year. ** without social taxes

Sources: Central Statistical Office GUS, NBP, C&W

Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)

Quarter Q3 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13

in Poland 1,381 2,886 175 -3,020 1,885 -3,614

Polish DI -550 -1,203 957 2,588 -1,449 1,588

Year 2008 2009 2010 2011 2012 2013

in Poland 10,128 9,343 10,507 14,896 4,763 -4,574

Polish DI -3,072 -3,335 5,484 -5,935 -607 3,684

Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)

Period 2011 2012 2013 Q2 '13 Q3 '13 Q4 '13

Trade balance -10,059 -5,175 2,309 1,203 1,094 151

Services, net 4,048 4,642 5,249 1,686 1,032 1,257

CA balance -18,519 -14,191 -4,984 486 -2,086 -1,071

CA balance vs GDP -5.0% -3.7% -1.5% -2.3% -1.9% -1.5%

Source: NBP, BZ WBK

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1,800

2,000

2,200

2,400

2,600

Q4 10

Q2 11

Q4 11

Q2 12

Q4 12

Q2 13

Q4 13

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, Q4 2013

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 563,000 17,000

22.3% 3.6–5.1

Warsaw suburbs 2,063,000 12.5% 2.1–2.8

Central Poland 1,021,000 80,000 15.2% 2.1–3.3

Poznań 1,023,000 215,000 4.4% 2.5–3.15

Upper Silesia 1,431,000 37,000 9.3% 2.4–3.3

Wrocław 780,000 259,000 11.7% 2.6–3.1

Tri-city 184,000 46,000 9.2% 2.8–3.3

Kraków 141,000 0 4.0% 3.3-4.0

CommercialCommercialCommercialCommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 2H'13 Retail rents**2H'13

Q4 '13

PLN/sq.m

Change

y/y

Headline

rents**

Vacancy

ratio

Retail

centres

High

streets

Warsaw 8,088 +5.1% 11.5-25.5 11.75% 80-90 85

Kraków 6,073 -8.9% 13-15 4.90% 35-45 78

Katowice 5,456 +2.5% 13-14 7.30% 35-45 56

Poznań 6,404 +4.4% 14-16 14.20% 35-45 55

Łódź 4,768 +2.6% 12-14 14.40% 35-45 25

Wrocław 5,928 +2.3% 13-15.5 11.75% 35-45 40

Gdańsk 6,525 +0.1% 13-15 11.20% 35-45 31

*avg, offer-based ** EUR/sq.m/month; Retail units 100-150 sq.m

Country Credit RatingsCountry Credit RatingsCountry Credit RatingsCountry Credit Ratings

Agency rating outlook

Fitch Ratings A- stable

Standard & Poor's A- stable

Moody's A2 stable

Source: Rating agencies

Real EarningsReal EarningsReal EarningsReal Earnings

Average gross wage vs inflation.

100

120

140

160

180

Feb10

Oct10

Jun11

Feb12

Oct12

Jun13

Feb14

Wage CPI

Index 100 = Jan 2005. Source: GUS

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