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MESSAGE _ENGLISH VERSION_ |
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Current report 12/2025
Subject: Signing of an
agreement on the exit from the Consumer Business of Bank Handlowy w
Warszawie S.A.
Legal basis: Article 17
Section 1 of Regulation _EU_ No. 596/2014 of the European Parliament and
of the Council of 16 April 2014 _MAR Regulation_.
In reference to current
report No. 12/2021 dated 15 April 2021, the Management Board of Bank
Handlowy w Warszawie S.A. _the "Bank"_ announces that on
27th May 2025 the Bank signed with VeloBank S.A. _"VeloBank"_,
Promontoria Holding 418 B.V. _the sole shareholder of VeloBank_ _"Promontoria"_
and Citibank Europe Plc an agreement concerning the demerger of the
consumer business of the Bank _the "Consumer Business"_ to
VeloBank _the "Agreement"_.
The demerger will allow
the Bank to focus on the growth of Institutional Banking, the Bank's
leading business area, which accounted for 72% of the Bank's revenues in
2024. The dynamic growth of this business, based on competitive
advantages and scale, will enable the Bank to achieve higher returns as
measured by return-on-equity _ROE_ and return-on-assets _ROA_ ratios.
The exit from the
Consumer Business is in line with the Bank's Strategy and is part of
Citigroup's global strategy.
Transaction
The transaction of the
exit by the Bank from the Consumer Business _the "Transaction"_
will take place in two related stages.
The first stage will be
the demerger of the Bank, resulting in the transfer of the Consumer
Business to VeloBank, in exchange for which the Bank will receive newly
issued shares in the share capital of VeloBank _the "Demerger"_.
The second stage, which shall take place as soon as possible and no
later than on the day after the registration of the Demerger by the
relevant registry court, is the repurchase by Promontoria of all of the
shares in the share capital of VeloBank that the Bank will subscribe as
a result of the Demerger.
Demerger
On the date of
registration of the Demerger by the registry court, VeloBank will
acquire the Consumer Business comprising consumer banking including
credit cards business, retail loans and credit _including PLN
mortgages_, deposits, wealth management _including retail brokerage
services_ and the servicing of businesses classified by the Bank as
micro-clients, as well as branches of the Bank and other assets and
liabilities of the Bank related to the Consumer Business, with the
exception of certain assets and liabilities related to the above
activities that will not be transferred to VeloBank, including, in
particular, loans in foreign currencies.
The Consumer Business
that is to be separated under the Demerger into VeloBank on the basis of
balance sheet data as at 31 March 2025 comprises a portfolio of
approximately PLN 6 billion of loans, approximately PLN 22.1 billion of
deposits, and approximately PLN 8.9 billion of assets under management,
with corresponding equity of approximately PLN 0.9 billion. The
difference between the liabilities and the assets of the Consumer
Business will be supplemented by short-term financial assets. The
Consumer Business comprises approximately 1,650 employees _including
those representing support functions_ and branches servicing Consumer
Business clients to ensure the continuity of services provided to
customers of the Consumer Business.
The portfolio of mortgage
loans in foreign currencies, amounting to approximately PLN 24 million
_based on balance sheet data as at 31 March 2025_ and the corresponding
provisions, will remain within the Bank's structures.
The Demerger Plan is
expected to be signed within 30 business days following signing of the
Agreement.
VeloBank share
repurchase price
The number of shares that
Bank will acquire as a result of the Demerger will be determined in
accordance with the mechanism set out in the Demerger plan, and will be
less than 25% of the total number of shares in VeloBank's share capital.
The above shares will be
repurchased by Promontoria from the Bank for an estimated price ofPLN
532 million consisting of two components based on the financial metrics
set out in the Agreement:
1.
the fixed
price component payable in connection with the closing of the
Transaction, the amount of which is estimated at approximately PLN 432
million, based on net
assets transferred by Bank to VeloBank at closing
of the Transaction and subject to a standard price adjustment taking
place after the closing of the Transaction; and
2.
the
variable price component, payable depending on the achieved business
volumes of the Consumer Business, of a maximum of PLN 100 million.
The Bank will announce
the final price in a separate current report.
In connection with the
Agreement, the Bank will recognize a net loss on the Transaction of c.
PLN 380 million in Q2 2025.
In addition, the
Transaction will release approximately PLN 400 million of excess capital
resulting from the deconsolidation of the assets and liabilities subject
to the Transaction, which will be used to accelerate growth in
Institutional Banking.
Consumer Business profits
generated until closing date will be recognized in Bank's financial
results.
Given its strong capital
position, the Bank has started preparations for amending the Bank's
Articles of Association and subsequently obtaining the approval of the
Polish Financial Supervision Authority for the payment of the Bank's
undistributed profit. In the event of a positive decision from the
regulator, the dividend payout ratio in 2025-2026 is planned at
75%-100%. In addition, the Bank intends to seek the regulatory approval
required for payment in the form of dividend in 2026 of the
consideration received by the Bank under the Transaction.
The Bank will announce
the regulator's decision in a separate current report.
Conditions precedent
to the Transaction
The completion of the
Transaction is subject to the following actions and the fulfilment of
certain conditions precedent indicated in the Agreement, comprising,
among others:
1.
obtaining
the relevant approvals or decisions of the Polish Financial Supervision
Authority by the Bank, VeloBank and their dominant entities;
2.
obtaining
the approval of the relevant antimonopoly authority and other relevant
authorities;
3.
obtaining
the tax interpretations specified in the Agreement;
4.
the
adoption of resolutions on the approval of the Demerger by the general
meetings of the shareholders of the Bank and VeloBank; and
5.
achieving
the readiness of the parties to the Agreement to perform the technical
and operational activities concerning migration of systems specified in
the Agreement in connection with the Demerger.
Contractual liability
The Agreement has been
structured on the basis of the principles of liability typical in
transactions of this type and scale. In particular, the Agreement
provides for liability in respect of the warranties made by the Bank in
respect of the Consumer Business and the commitments entered into by
Bank in respect of the operation of the Consumer Business in the interim
period _i.e. from the signing of the Agreement until the date of the
Demerger_. In addition, the Agreement contains provisions for the
granting of indemnities, up to specified caps, by the Bank in respect of
certain identified risks.
Independent assessment
of the Transaction
The Management Board of
the Bank informs that it has received from Ernst _ Young Sp. spółka
z ograniczoną odpowiedzialnością Corporate Finance sp.k. _"EY"_
an independent opinion _the so-called "Fairness Opinion"_ on the
fairness of the financial effects of the Transaction.
EY made an independent
assessment of the estimated value of the Consumer Business, taking into
account the data received and using standard valuation methods. In the
opinion of EY, presented to the Management Board of the Bank, the
proposed pricing terms are fair from the point of view of all existing
shareholders of the Bank.
A similar opinion
confirming the fairness of the financial effects of the Transaction was
also obtained from another reputable financial advisor.
Attachment: Presentation -
Consumer Bank Exit
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RB-W: Podpisanie umowy w sprawie wyjścia z Działalności Detalicznej Banku Handlowego w Warszawie
S.A. 
