BGZ, Cheapest Polish Bank, Jumps 6% After Debut on Warsaw Stock Exchange

Bank Gospodarki Zywnosciowej SA, the Polish unit of Rabobank Groep, jumped as much as 6 percent in Warsaw trading after the government sold 312 million zloty ($111 million) of shares in an initial public offering.

The shares climbed to 63.6 zloty and traded at 61.4 zloty by 10:44 a.m. in Warsaw, valuing the bank at 2.65 billion zloty.

The Treasury Ministry sold 5.2 million shares in the bank known as BGZ, a 12 percent stake, for 60 zloty a share this month, below the proposed price range of 66 zloty to 90 zloty. The government scaled back the IPO from a stake of as much as 37 percent because of “limited” investor demand. Rabobank, the world’s biggest agricultural lender, owns 59 percent of BGZ.

Based on its price to book value ratio, BGZ is the cheapest Polish lender trading in Warsaw, according to data compiled by Bloomberg. The bank trades at 1.06 times its 2010 book value of 2.5 billion zloty, compared with an industry average of 1.88 times. The second cheapest is Bank Ochrony Srodowiska SA, controlled by the Polish government, with a ratio of 1.12.

“The valuation ratio is low for a reason,” said Tomasz Bursa, a Warsaw-based analyst at Ipopema Securities SA. “BGZ is one of the least profitable banks in Poland.”

BGZ’s return on equity ratio, a measure of profitability, was 4.6 percent last year, according to IPO documents published on the bank’s website. The average return for Polish banks is 10.4 percent, according to Bloomberg data. BGZ plans to increase its return on equity to at least 10 percent in the next three to five years, BGZ Chief Executive Officer Jacek Bartkiewicz told Bloomberg today, confirming a report in the Parkiet newspaper.

State Sales

The IPO was part of a government plan to raise 15 billion zloty from state asset sales in 2011 to help finance the budget deficit and limit debt. The government this year will offer shares in PKO Bank Polski SA and coal producer Jastrzebska Spolka Weglowa SA after raising almost 33 billion zloty since taking office in late 2007.

Poland, whose sole stock exchange is central Europe’s fastest-growing equity market, had 77 IPOs so far this year, attracting more companies than all of western Europe and ranking second after China among emerging markets, according to data compiled by Bloomberg.

Citigroup Inc. and UBS AG were the global coordinators for BGZ’s IPO. PKO and Espirito Santo Investment Bank are acting as bookrunners.

To contact the reporters on this story: Pawel Kozlowski in Warsaw; Marta Waldoch in Warsaw on

To contact the editor responsible for this story: Gavin Serkin at

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