Emerging Leader: Leszek Czarnecki, Chairman of the Board, Getin Holding and banking entrepreneur, Poland

Image Credit: Getin Holding S.A.

“Musicians can’t explain why a new melody pops into their heads during their morning shower.”

– Leszek Czarnecki, quoted in Spiegel Online, when asked where he gets his inspiration

When Leszek Czarnecki was presenting his doctoral thesis in economics at the Wroclaw University of Economics, Poland was slowly coming out of the Iron Curtain. But the restless entrepreneur in him would not allow this to hold him back. Czarnecki’s passion for cave diving led him to establish a commercial diving company with a few of his college friends. The firm managed to do good business by undercutting the government-owned rival in pricing, and also by delivering services better and faster. Encouraged by his first success, Czarnecki put his apparent Midas touch to good use in his subsequent business endeavors, a skill which has also made him one of the richest businessmen in Poland with a net worth estimated at $1.4 billion.

Of course, the end of the Cold War and the ensuing collapse of the centrally-planned economy whisked a whiff of fresh air to the Polish business world. Czarnecki literally cashed in on the open economy by selling his commercial diving company, which earned him enough money to lease a Mercedes. One thing led to another, as they say. Czarnecki realized that there was money to be made from the leasing business, prompting him to enter the market leasing cars and construction machinery. Initially, the European Leasing Fund, the company which he founded in 1991, struggled to get on its feet. In the small provincial Polish suburb where the company office was located, the word “leasing” was a foreign concept. The business clicked only when the firm shifted its base to the nation’s capital Warsaw. The euphoric success catapulted the company to a listing on the London Stock Exchange in 2000. A year later, Czarnecki sold his leasing firm to Credit Agricole S.A. for $270 million, which also gave him a 25% stake in the French bank’s Polish unit. The transaction marked Czarnecki’s first brush with the Polish banking sector, which was dominated by a few state-owned banks as well as wholly-owned subsidiaries of West European banks.

But Czarnecki’s entrepreneurial spirit would not let him remain a minority stakeholder in the French bank. The big money he pocketed from the sale of his leasing unit and the minority stake in Credit Agricole provided the capital for the establishment of Getin Holding S.A. in early 2003. The period though was not exactly an opportune time to enter the financial services sector in Poland, which was still reeling under the effect of years of poor performance. Still, good profits combined with economic recovery and the demand for retail finance changed the situation for the better by the year 2005.

It must be acknowledged that the market reforms initiated in Poland after the fall of communism helped set the stage for the development of the country’s banking sector. Actually, Poland’s transformation into a market-oriented economy during 1992-1997 involved the restructuring of some of the country’s financial institutions. While some banks were privatized and the remainder recapitalized, the government also introduced some legal reforms that made the sector competitive. These reforms lured strategic investors into exploring the country’s banking sector. In short, the late 1990s witnessed the flowering of Poland’s banking sector, which emerged as a commercially-oriented entity.

Poland’s accession to the European Union in 2004 was another watershed event that gave a big fillip to the country’s banking sector. In fact, the last decade witnessed rapid changes in the industry with foreign investors making a beeline for the fast-growing eastern European economy. The flow of liberal EU funds and remittances from Poles working abroad helped develop the domestic banking sector. As well, Poland’s domestic economy benefited from the presence of foreign banks during the early years of the country’s economic transformation, as these deep-pocketed financial institutions also brought along the finesse and technical know-how required to transact business in a fast-changing world.

“…Banking is an uncomplicated business,”

– Leszek Czarnecki, quoted by Financial Times

Czarnecki decided to plunge headlong into the Polish banking sector around the year 2003, not heeding to the general perception that the industry may be a bit overcrowded with local units of foreign banks jostling for space with big state-owned banks. Acquisitions of small Polish banks such as GBG and Wschodni Bank Cukrownictwa followed. Meanwhile, Czarnecki had also made investments in property, internet services, insurance, and a vehicle leasing business in Russia called Carcade.

Despite the diversification, Czarnecki was convinced that retail banking was his cup of tea. Quite naturally, Getin Noble Bank, which he established in 2003 based on the GBG license, became the object of his affection. Getin offered car loans, mortgages, and consumer finance until it merged last year with another group entity, Noble Bank. In fact, the combined Getin Noble Bank, the eighth largest Polish bank with assets worth $15.3 billion, is among the few private banks in the country not controlled by foreign financial institutions. Over the years, Czarnecki has steadfastly followed a strategy of fast organic growth and acquisitions, helping his holding company become the biggest Polish private financial services group. Not confining himself to Poland’s borders, Getin Holding has stakes in companies operating in Russia, Ukraine, and Belarus. Known to promote a dynamic business culture in his organization, Czarnecki is also said to be particular about handpicking executives who share his business philosophy.

The 48-year old Czarnecki belongs to that rare breed of entreprenuers who are shrewd enough to seize growth opportunities even in the face of a crisis. In fact, Getin Bank, which had two-thirds of its mortgages denominated in Swiss francs, was seen as one of the most vulnerable financial institutions in Poland in the run-up to the financial crisis of 2009. What makes Czarnecki’s handling of the crisis unique is that unlike many of his international competitors, Getin did not have a foreign parent to turn to in its hour of need. However, Czarnecki executed a quick turnaround by abruptly stopping all lending in foreign currency. Emerging stronger from the crisis, Czarnecki has aggressively pursued his policy of acquisitions by snapping up GMAC and German Allianz Bank’s Polish subsidiary over the last two years, even as his struggling Western rivals find it hard to focus on their Polish banking assets. While other Polish billionaires amassed their fortunes in media and spirits businesses not dominated by foreign investors, Czarnecki’s achievement stands out as he instead decided to plough a lonely furrow in the highly competitive banking sector.

Czarnecki’s business acumen has won him several accolades. The Wall Street Journal rated Czarnecki the Best CEO in Central Europe in 1998, while he was the only Pole to be included on the list of 25 emerging stars of European business brought out by The Financial Times in 2004. Known to be a very private person, few in Poland know that the father of two children also runs one of the biggest charitable organizations in the country. Having scripted a successful business story, Czarnecki has penned a guide book for wannabe entrepreneurs as well as a book on the financial crisis of 2007-2008.

Getin Holding, the listed parent company in which Czarnecki owns a 56% stake, is actually the best-performing Polish financial stock this year. Czarnecki is betting big on corporate banking services and the rising demand for mortages to fuel his company’s growth in the coming years. And Czarnecki’s recent move to acquire the Polish unit of Norwegian bank DnB Nor shows that he is determined to take his business to even greater heights. Czarnecki’s real estate firm is the promoter of what is touted to become the tallest building in Poland. Likewise, it appears that Czarnecki also has towering ambitions of his own.