Focused on the corporates and institutions Michał H. Mrożek, president of the management board, HSBC Bank Polska talks to Thom Barnhardt

Given that this is a 25th Anniversary publication for Having witnessed growing connectivity of the market on the BPCC, let's go back in time to HSBC's first steps inbound and outbound basis, in 2007, we launched our in Poland. corporate banking proposition. As Poland grew wealthier in this period, we were building up our retail banking and HSBC has been present and actively engaged in Poland's wealth-management/premier-banking services as well. key economic milestones over the last 25 years. In the early 1990s, the British Know-How Fund was involved in The crisis of 2008/2009 had an impact on global banks, advising on Poland's first privatisations, which were to a and we were no exception. We sold our consumer finance large extent modelled on the UK's privatisation experien- arm in Poland (to Alior Bank), which allowed the at-that- ces from the Thatcher years. Trade sales to strategic -time startup-bank to inherit a national consumer-finance buyers and the nascent IPO market were important in the platform. Then HSBC decided to close its retail banking mid-'90s. A number of British advisers were coming to and wealth management arm in Poland, and focus on Poland, and that's how HSBC took its first steps here. corporate and institutional customer segment. We came out of the crisis with a much sharper focus. You mentioned a number of milestones that marked Poland's development – as well as HSBC's support We continue concentration on this segment and – being of that development. a specialised bank – we have the comfort of being able to focus all our efforts on corporates and institutions unlike Growth in the '90s was driven by consumer spending and universal banks. Recently, we have become more involved Polish consumer spending and aspirations. As part of this, with Financial Institutions and the public sector, supporting HSBC bought a consumer finance platform with a banking them in realising their needs and ambitions. In 2016, for license (in 2003), and this – following a rebranding in 2004 example, we helped the Polish government on four bond – was our first official start as a bank in Poland. Prior to issuances, including two innovative transactions: 'panda' that, we'd been operating in this country as an investment bonds and green bonds. company. In August HSBC acted as joint book-runner and joint A key milestone for Poland's economy was its accession to lead underwriter for Poland's first ever Chinese currency the EU in 2004, which had a dramatic impact on opening (RMB) bond issuance. The transaction made Poland the Europe's markets for Polish companies, and supporting the first European sovereign to issue an RMB denominated expansion of foreign companies into Poland. onshore bond, also known as a panda bond. This allowed Poland to diversify its funding sources, gave Chinese investors an opportunity to diversify their portfolios and it demonstrated the growing importance of the RMB as a global investment currency. It was a milestone in creating first links between Polish and Chinese financial markets. In December 2016 HSBC acted as sole green structuring adviser and joint bookrunner for Poland's first ever green bond issuance. The transaction made Poland the first sovereign in the world to issue a green bond and allowed the country to – again — diversify its funding sources, as investors are increasingly focused on integrating environ- mental factors into their investment processes. HSBC is proud to have contributed to these landmark transactions.

Here we are in year 2017. What has surprised you on the upside about Poland's development? And what areas/issues are yet to be resolved, or remain unfulfilled? The Polish economy grew at 4% in Q1 2017. A key strength of Poland's economy – unlike in the case of many other emerging markets – is that it is balanced and not over-reliant on any one sector, which is a reflection of the reforms implemented by Poland over the last 20 years or so. And it is now running on multiple engines:

26 BPCC’s quarter century domestic consumption is strong, exports are strong, and lending to companies that cause deforestation or operate infrastructure spending and investment are boosting the in the coal sector. economy. EU funds have been a big boost to the economy. Unemployment has fallen significantly, and we are seeing The size and global reach of HSBC's network means that new investment coming. Anecdotal stories show us that there are people who try to use our services for the wrong investors who may have been sitting on the fence are now reasons. But our scale and global footprint also put us in going forward with investment plans, and we are hearing a unique position where we can make a positive contribu- about new projects. In the public sector, infrastructure tion and be at the forefront of the fight against this threat. projects – especially transportation and rail – are engines HSBC is committed to implementing the most effective of growth also. Companies focused on the infrastructure global standards to combat financial crime. In some cases, sectors are busy. this means we stopped selling certain products and ended relationships with customers where we felt that the On the export side, we're seeing strong growth, and not financial crime risks were too great to manage effectively. only to the traditional EU markets, but also to non-EU markets. That's where HSBC is particularly well-positio- Tell us about the state of Poland's capital markets. ned to help companies expand to new markets including Both the equity and debt markets are gaining in strength Americas, the Middle East and Asia. right now. As yields on Polish sovereign bonds continue to narrow, corporates are following, and are also getting We aim to be the leading international bank. Our focus on interest from international investors. For example, we've inbound and outbound corporate business fits well with seen recent strong interest from Japanese investors in Poland's recent emphasis on supporting Polish companies Polish sovereign debt. Poland is being assessed very in their foreign expansion. positively by international investors.

What advice would you give to an 18-year old about Polish mid-sized firms are to enter university in Poland? I'd suggest they find an area that they are particularly becoming successful in interested in, and develop this passion into a profession. That said, there are many interests or passions that are taking over foreign compe- difficult to be translated into a job that enables making a living. titors and in establishing The world is changing so quickly that it is difficult to brands on foreign markets foresee what sort of skills and knowledge will guarantee employment in five or ten years. Some professions that are What are priority sectors for you? Where do you think popular nowadays were unknown five or ten years ago. HSBC has a strategic advance over its competitors? But one trend that's clear is the unprecedented techno- Which sectors do you not want to be involved in? logical advancement across all sectors. IT specialists are The Polish government has made support of foreign already among the most sought-after employees and I'd expansion of Polish companies one of its key economic expect this trend to strengthen in coming years. But it's priorities. We at HSBC are supporting exports, across a not just IT. Companies are looking for people capable of range of sectors, including agriculture, furniture, pharma- innovations that would allow them to gain a competitive ceuticals, chemicals, automotive and consumer goods. advantage, by introducing new products, finding new What's very encouraging is that some of the Polish applications for already existing products or new ways of consumer and B2B players are able to take on internatio- 'doing things'. Another trend that is already very visible nal brands, and they have very good business models. And in some parts of the world and will soon become more as we can observe, cross-border mergers and acquisitions evident also in Poland are ageing populations. The elderly are not reserved only for the biggest companies, the so will constitute a growing share of the consumer market. called 'national champions'. Mid-sized companies are And it's not just about medical services or specialised care, successful in taking over competitors with established it's about all sorts of services and products that customers brands to expand to foreign markets too. Some of them are aged 65+ may need. unknown to the public, we call them 'hidden champions' – a term invented by German professor and business consul- tant Hermann Simon. Cross-border mergers and

Sectors that we would rather avoid are those, generally, acquistions are no longer that have failed to fully execute on needed restructuring. One sector I worry about, for example, is the power sector, reserved for the biggest which remains heavily dependent on fossil fuels at a time when financial institutions are being pressed to pull back companies from supporting fossil fuel-based energy generation. We're a member of the HSBC Group, which has policies to restrict

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