ING Bank Śląski

Founding and privatization

Bank Śląski was legally established under a Council of Ministers regulation of 11 April 1988, and started operations on 1 February 1989, as one of nine banks spun off in the late 1980s from the National Bank of Poland (NBP). The change was part of the reforms during the 1989 political transition, when central-bank functions in the country's single-tier banking system were separated from commercial banking. Bank Śląski was the second-largest of the Nine by assets – roughly twice those of Wielkopolski Bank Kredytowy – and one of the first two earmarked for privatization. In October 1991, Bank Śląski was transformed from a state bank into a joint-stock company wholly owned by the State Treasury. On 13 January 1994, the State Treasury began the bank's privatization by selling a 25.9% stake (2.4 million shares, for US$ 60 million) to Amsterdam-based ING Bank N.V. ING was bound to hold the stake for at least three years; the State retained 33%.Later that month, on 25 January 1994, the bank's shares debuted on the Warsaw Stock Exchange – a listing that proved controversial. The issue price was 13.5 times lower than the price set at the first trading session, enabling rapid, high profits for buyers. Bank employees, who received shares at a preferential price and without the reductions applied to other buyers, held the largest individual allotments. At the same time, a high volume of subscriptions from more than 800,000 investors unconnected to ING led to substantial allotment reductions, down to three shares per person. Of the shares on offer, 45% were allotted through an institutional tender (minimum bid corresponding to a 2% stake, capped at 25% per investor), 15% were reserved for small investors and 10% for employees, with the State Treasury retaining the rest.

Controversy over the share issue

As Bank Śląski had the most extensive network of brokerage offices in Poland, prosecutors opened an investigation into whether its authorities had colluded to inflate the share price, and the Securities Commission (KPW) stripped it of its brokerage license. It was restored within weeks but with restrictions, and KPW imposed a PLN 500,000 fine on the bank, twice, after another investigation — citing incomplete reporting on remedial measures and inadequate internal oversight, the maximum short of revoking the license outright.

The controversy surrounding the first weeks of trading led the supervisory board to dismiss the bank's founding president Marian Rajczyk, a career NBP official, in spring 1994. Prime Minister Waldemar Pawlak also dismissed the deputy finance minister, who had overseen the privatization process, without consulting minister Marek Borowski; Borowski himself subsequently resigned. Sejm deputy Bogdan Pęk alleged losses "in the billions"; the Supreme Audit Office (NIK), then headed by Lech Kaczyński, concluded that responsibility for the mishandled operation was shared among the bank's management, the Securities Commission, the exchange's management, and finance-ministry officials. The same year, the Sejm's special committee reviewing the sale rejected most of the allegations, and found no evidence for a list of politically connected buyers, concluded the issue price had been properly set, and the bank not undervalued.

According to NIK's own findings, the finance ministry had set the issue price too low (500,000 against a first-session price of 6,750,000 old złoty) and had "cooled" the market by selling 95% of the Treasury's remaining stake at capped prices; several officials denied deliberate manipulation. An economist asked for a review concluded the issue price had been set appropriately. In 1995, the chairman of the Sejm committee said "there [was] no Bank Śląski affair." The privatization was the subject of prosecutorial proceedings and criminal trials, which did not result in convictions, as well as independent audits by the Securities Commission, the Supreme Audit Office, and another parliamentary Committee on Banks and Banking Supervision, active from 2006 to 2007. Civil lawsuits brought against the bank in connection with these events did result in judgments against it. Rajczyk denied wrongdoing and rejected the "Bank Śląski affair" characterization in his 2014 book.

Sale to ING

In 1996, following two off-exchange share-sale transactions by the State Treasury, ING became the bank's majority shareholder of Bank Śląski. ING first offered, in May 1996, to buy a further 27.2% of share capital at 210 złoty per share, for at least PLN 528.9 million (US$195 million); when the sale was finalized weeks later the stake purchased had grown to 28.1%, raising ING's total holding to 54.1% (1,937,000 shares), and making it the first fully completed privatization of a major Polish bank. The remaining shares were held by the Templeton fund (5%), the State Treasury (5%) and small shareholders (35.9%). In 2000, the bank established a specialist mortgage bank under the name Śląski Bank Hipoteczny.

ING was itself formed on 4 March 1991 through the merger of the banking group NMB Postbank Groep with the insurer Nationale-Nederlanden, creating a combined bancassurance conglomerate that has since grown into one of Europe's largest financial-services groups. The Wall Street Journal described ING's 1994 entry into Bank Śląski as marking Central Europe's first large-bank privatization to draw a private foreign strategic investor. The paper reported that ING was positioning the bank for a leading role in the group's growth strategy in Poland.

Corporate expansion

In mid-2000, ING surveyed customers of the bank on its rename; with two names under consideration including ING Bank Polska, and the bank's existing logo. In mid-2001, shareholders approved authorizing the issue of 3.75 million new shares in exchange for ING's own Warsaw branch, contributed in kind and valued at PLN 993.75 million. In September, the merged entity started operating as ING Bank Śląski. The enlarged bank's own capital stood at about PLN 2.5 billion, on 2000 net profit of PLN 248 million. Then-president Marian Czakański described the merger as part of a shift from a regional to a nationwide bank, with expansion focused on Warsaw, Poznań and the Tricity; in 2000 the bank had gained 145,000 individual customers, raising its checking-account base to 842,000 and its branch network to 320, with the ATM network – from 381 to 450.

In March 2005, honoring an earlier commitment to the Polish regulator, ING Bank N.V. sold its shares on the WSE, reducing its stake from 87.77% to 75%. In the same year, by decision of the Banking Supervision Commission, the bank assumed administration of Wielkopolski Bank Rolniczy owing to its poor financial condition and subsequently absorbed it. At the time, the bank introduced the instant-access savings account, one of the first such products among Polish major banks.

ING Bank Śląski forms a capital group of its own, with subsidiaries spanning factoring, leasing, mortgage lending, corporate, and accounting services, and business process automation. Listed here in the order in which they were founded or joined the group:

ING Faktoring, formerly ING Commercial Finance Polska – Poland's first dedicated factoring company, registered in 1994; joined the ING Group brand in 2006 and became part of the bank's own Capital Group in 2012.

ING Leasing, formerly ING Lease (Polska), operating on the leasing market since 1995; part of the bank's capital group since 2012.

ING Bank Hipoteczny, mortgage bank that traces to Śląski Bank Hipoteczny, established in 2000 (see: History).