Citigroup Inc. is planning a sizable expansion of its five-branch network in Poland, according to banking sources in Warsaw.

Citi, the largest banking company in the United States, plans to open 25 branches in Poland during the next two years, these sources said.

A Citigroup spokesman in New York was unavailable to comment.

The sources said Citigroup's plan is a response to the Polish government's postponement, until June, of a decision on the sale of Warsaw- based Bank Pekao.

Citigroup applied in March to bid for Pekao, one of Poland's largest banks. A consortium made up of Credito Italiano and the German insurance company Allianz also submitted an application to bid.

The government originally said it would open up bidding for Pekao at the end of March, but it has postponed the sale of the $15 billion-asset bank because of sensitivity surrounding the prospect of its purchase by foreigners.

Citigroup will seek to buy another Polish bank if its try for Pekao fails, said Stanislaw Berkieta, project director of Citibank Polska.

Poland's fast-growing banking market has attracted a host of U.S. and Western European institutions, which have taken large equity stakes in Polish banks in recent years.

"Poland's banking system has dramatically expanded and has become more efficient in recent years," the U.S. Treasury recently said.

According to the Treasury, Polish banking assets are now more than $70 billion and are growing at twice the rate of the Polish economy.

As of June 1998, U.S. financial institutions held majority stakes in nine Polish banks and jointly controlled 4% of the Polish banking system's total capital. U.S. banking companies also held 3% of the country's net assets and deposits.

Citicorp, Citigroup's predecessor, was the first U.S. banking company to enter the Polish market, in 1991. Citigroup now has more than $100 million of capital invested in Poland.

GE Capital Corp. and BankAmerica Corp. have wholly owned banks in Poland. Ford and General Motors/Opel also have their own banks, primarily to make auto loans.

American Express Co. has obtained a banking license in the country, and the U.S. insurer American International Group Inc. has acquired a majority stake in Bank Podlaski to support its consumer credit activities. Chase Manhattan Corp. and J.P. Morgan & Co. also have banking offices in Warsaw.

Sources in Warsaw said U.S. banks are competing for market share in Poland mainly against Western European institutions.

This month, Raiffeisen, Austria's third-largest bank, said it would invest $250 million in Poland. Raiffeisen, Allied Irish Banks PLC, and France's Societe Generale were selected to be final bidders for Bank Zachodni, Poland's 12th-largest bank.

Also this month, Deutsche Bank AG paid an undisclosed amount for 9.9% of BIG Bank Gdanski SA.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.