British Polish Chamber of Commerce

Does Bank Pekao SA see an increase in enquiries connected with new inward investments into Poland? If so, in which sectors, and from which geographic regions? Do you cooperate with PAIH and other state institutions, Polish embassies around the world, for instance, in attracting FDI into Poland?

I think that over the past year we have been seeing an overall stable inflow of foreign investments, which considering the circumstances of economic lockdown and temporary postponements of investment decisions, is in fact a satisfactory result. Our new clients originated mostly from Germany, Great Britain, but also other European countries and the US. We have been recently onboarding newly established subsidiaries coming from the IT sector, agri-food industry, machinery and vehicles sector as well as pharma & cosmetics. We also see new investments and re-investments in the automotive supply chain.

In Pekao we pay attention to developing in-house support for international companies entering and developing activities in Poland, as well as through cooperation with state institutions, embassies, chambers of commerce and partner banks. We offer comprehensive support for foreign corporate representatives from our International Clients Office, macroeconomic and industrial analysis from Pekao team of economists, consultancy on export finance with state support scheme, M&A advisory by Pekao Investment Banking and expertise of our EU Funds and Public Programmes Office.

How do you see the Polish economy developing in a post-Covid world? Which sectors show most promise?

Looking at the perspectives of 2021, Poland’s GDP is to be back on strong growth track. According to Bank Pekao forecasts the GDP growth rate should exceed 4% with main drivers being exports due to general recovery in the world economy and private consumption.

The perspectives of individual sectors are shaped by several key trends including: accelerated digitalization with increased expenditures on all sorts of IT products, switch to e-commerce and home-deliveries (the share of e-commerce in overall retail In Poland is expected to grow from 11% up to about 19% in 2025), increased health awareness and importance of health protection, energy transformation as one of priorities of governmental economic recovery programs. Such overview of key economic trends in the post-Covid world leads to a conclusion that the industries in Poland which seem to have especially good outlooks are ICT, due to the continued need for remote solutions, e-commerce and digitisation, which translates into big demand for software and ICT services. Then there are the paper, chemistry and pharma sectors, with essential goods such as pharmaceuticals, hygiene products, disinfectants, packaging. Utilities are a strategic sector for functioning of companies and citizens and with perspectives of benefiting from state support. The agri-food sector proved a high resilience to economic downturn; its future growth, however, is subject to an increase of productivity and expansion to new foreign markets. And finally, the production of consumer durable goods, such as wood products & furniture, electronics, home appliances, are benefiting from the stable condition of the local labour market as well as accelerating foreign demand.

What difficulties await those sectors hardest hit by the pandemic - tourism, hospitality, retail - as they rebuild?

In the short term, the main difficulty remains uncertainty as to how fast the pandemic will be dealt with and restrictions lifted. The re-opening will be gradual and subject to maintaining sanitary and social-distancing standards. This contributes to an increase in the costs of maintenance and operation, and continued demand constraints.

The sectors you mentioned suffered from dramatic decline in revenues in 2020, which resulted in financial losses recorded by nearly two-thirds of all hotels and 80% of all tourist operators. Despite strong government support, securing their liquidity and helping to avoid a mass wave of insolvencies, their financial situation is very weak, which will for sure limit their investment capabilities in the coming quarters or even years. In an optimistic scenario however, the sectors hardest hit may experience a short-term boom after months of closing. The long-term period of lock-down and social-distancing generates an appetite to return to active travelling, entertainment and traditional shopping.

Let’s turn to banking, what innovations is the sector introducing to improve service to business and consumers? What is the greatest change we'll see in coming years?

The most visible area of innovation and improvements in the banking sector is digitalisation, and the pandemic reality proved that the speed of change in this respect is critical.

Only last year Bank Pekao launched many digital product and service innovations. To name but a few examples - a new Pekao24 transaction service based on omnichannel solutions. Our Qlips service, for example, allows customers to pay invoices for mass services, such as phone or utility bills with just one click without additional passwords. The Pekao internet banking platform has extended the range of self-service operations – such as the Autopay function, which offers the possibility of making contactless payments for motorway tolls automatically.

Another innovation which also marks the future of financial services is open banking based on API. Within Pekao internet banking and the PeoPay application, consumers holding accounts with other banks in Poland can check account balances, transaction history, order domestic transfers and even order foreign transfers from accounts maintained with a number of other banks in Poland.

Also, cooperation with enterprises and corporates is moving more and more online – with use of multiple electronic signature forms or digital onboarding of new clients registered in Poland by means of video-verification and signing agreements via online banking.
The next step in Pekao’s innovations is the strategic partnership in the e-commerce market, which is being realised through acquisition of a stake in the operator of the Tpay.com payment processing system. This will result in a comprehensive payment acceptance offer for corporate clients, including the special needs of e-commerce.

The future lies in bringing relationship management to another level, where the relationship manager thanks to the corporate cloud and AI powered analytics is equipped with all necessary information relevant to the client and its market of operations.

Do you think Poland is sufficiently innovative –  can enough new ideas be invented and commercialised here for Poland to escape the middle-income trap – or is Poland destined to remain a location for outsourcing ever-more sophisticated processes for other economies?

It’s fair to say that the level of innovation and commercialisation is still moderate. In the Global Innovation Index, Poland ranks 39th out of 127 countries analysed, and in Europe, Poland comes 25th out of 39 countries.

But with increased expenditure in those areas of education, which bring added value in terms of competitiveness, innovation and patents, fostering cooperation between business and science, as well as continued support through various types of programmes, reliefs and subsidies, the environment for innovation can be improved.

I believe that companies in Poland have been proving their creativity, entrepreneurship and capability of selling their products and services even on distant foreign markets. We experience that when developing structured export finance offers for our clients. Our financial products and expertise enable companies to extend their product offer with a financing package also for foreign buyers, and so manage the risk of more difficult markets.  

Attracting foreign direct investment is about international competitiveness. In what areas should the Polish government strive harder to attract new FDI? Do you think, for example, that the tax system for business should be simplified and made more user-friendly? If so, in what specific areas?

When assessing Poland’s international competitiveness, it is good to give voice to foreign investors and learn from their experiences. From what we hear, they are sceptical about the predictability of economic policy, judicial effectiveness, bureaucracy, complex tax reporting and related burdens, but they are also concerned about the shrinking labour market.

Development of the labour market can be achieved by directing funds to appropriate areas of education, as well as improving the activities of labour offices, and streamlining employment procedures.

Further efforts should be made to enhance cooperation between investors and public administration – obtaining clear and transparent tax rulings, fast tracks for key investment processes, shortening and simplifying the process of obtaining investment permits.

Green transformation and digitalisation will be the slogans surrounding the next EU multiannual financial framework. Digitalisation is moving ahead relatively well in Poland, but how do you see the 'green transformation' agenda progressing in a country that continues to be reliant on coal? Does Pekao SA have a green-finance policy?

Poland’s electricity mix is indeed still heavily based on fossil fuels (extracted in large part from local resources) and as a country we are lagging behind in the energy transition compared to other EU-members.

It’s worth noting however, a recent legislative development. In January Poland’s first Offshore Wind Act was adopted, which opens the path to develop offshore wind in the Baltic Sea. The aim is to have installed 3.8 GW by 2030, 10 GW by 2040 and 28 GW by 2050. That would result in the biggest market for offshore wind in the Baltic.

Speaking of Bank Pekao’s activity, supporting environmentally friendly projects, which aim at transition to low-carbon economy and climate change mitigation is embedded in the Bank’s credit policy. Pekao has been increasing the financing of renewable energy and energy efficiency projects. Examples of this involvement include engagement in financing the largest onshore wind farm in Poland – Potęgowo in Pomerania, entering in PLN 150m agreement with EIB for a financing line for SMEs in the Kujawsko-Pomorskie province related to increasing their energy efficiency, acquiring €100m by Pekao Leasing from the EIB to finance improvement of energy efficiency and developing renewables in the SME sector.