A European player enters the Polish banking market. Integration and rebranding will be expensive
The finalization of the transaction is fast approaching. Erste expected this to take place at the end of 2025. The finalization of the sale transaction depended on obtaining regulatory approvals (the consent was recently issued by the European Commission) and meeting other preliminary conditions, including the sale of 60% to the Santander Group. shares of Santander Consumer Bank (currently in the hands of Santander Bank Polska). SCB is currently reported in the bank's financial statements as a discontinued operation.
Costly integration of a Polish bank with an Austrian one
– As it was said, the transaction will be finalized around the end of the year and in my opinion this is a realistic date – said Michał Gajewski, president of Santander Bank Polska during Wednesday's earnings conference.
He emphasized that it is too early to provide cost estimates for the bank resulting from the takeover transaction by Erste Group. – These costs will probably also be related to the brand change, and here we still need the consent of the Polish Financial Supervision Authority – said Gajewski.
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Erste Group
Costs are one of the most interesting aspects of this acquisition. In spring, at a special conference after signing the contract, Peter Bosek, president of Erste Group, suggested that the costs of integrating the IT systems of both banks may amount to up to EUR 150 million (almost PLN 640 million). To this should be added the costs related to rebranding, because the “Santander Bank Polska” brand will, for natural reasons, disappear and be replaced by the new Erste Bank brand. Analysts of the mBank Brokerage House estimated – based on the costs of rebranding BZ WBK into Santander Bank Polska in 2018 (estimated at PLN 60-70 million at that time) and taking into account inflation – they estimated them at approximately PLN 92-107 million. The total integration costs could amount to approximately PLN 750 million.
See also: A leading Polish bank will undergo rebranding. This is what new facilities may look like
During Friday's results conference, President Peter Bosek suggested that one-time integration costs will amount to approximately EUR 200 million, or approximately PLN 850 million. (probably about the total costs of integration, i.e. in terms of IT and rebranding, as well as the increased marketing necessary to build awareness of the new brand).
– And although it is unlikely that we will achieve a profit of EUR 4 billion in 2026 on a reported basis due to the accounting of the usual one-off items that must be absorbed during the first consolidation of such large transactions, this does not change anything in our ambition to achieve such a cleaned result already in 2026 – said Peter Bosek on Friday.
The President pointed out that this includes, among others: o one-off loan provisions, which will be booked only by Erste Group, resulting from the takeover of Santander Bank Polska. According to analysts, these provisions may amount to EUR 300 million and will be released over time – provided the assumptions regarding credit losses were correct – in subsequent periods, so it will have a neutral impact on the result of the Austrian group.
The costs will be mainly borne by Erste Group?
The mentioned EUR 200 million (PLN 850 million) seems to be a large number in absolute terms, taking into account historical transactions. For example, the costs of integrating Millennium with the acquired Euro Bank amounted to PLN 350 million (2018), BNP Paribas with the core business of Raiffeisen Polbank PLN 500 million, and Santander with the core business of the Polish Deutsche Bank PLN 255 million.
All the more so because the takeover of Santander Bank Polska by Erste Group seems to be a simpler operation, because in this case there will not be a large reduction in employment thanks to the removal of duplicate positions, which occurs in the case of merging two banks operating on one market (as in the above-mentioned examples). Moreover, now there will be no significant synergies resulting from the transaction (unlike in mergers).
See also: Erste enters the Polish banking market. These may be the consequences
However, we must remember about cumulative inflation: consumer inflation in Poland in 2018-2025 was approximately 52%, but prices in the IT area, which constitute the bulk of integration expenses, could have increased even faster (suffice it to recall the great demand and increase in prices of IT services during the pandemic). Moreover, the cost of integration should be related to the size of the institution, i.e. to its total costs or revenues. For comparison, in 2025 Santander Bank Polska will record approximately PLN 1.8 billion in operating costs and generate nearly PLN 16 billion in revenues. In the case of Erste Group, this may amount to EUR 6.1 billion and EUR 11.5 billion, respectively.
What is important is what part of the integration costs will be directly borne by Santander Bank Polska and what by Erste Group. The press office of the Austrian group replied to the editorial office of Business Insider Polska that most of the €200 million in costs “will be borne directly by Erste”. “For now, it is too early to provide details of what part of these expenses will be booked in Poland,” replied the Austrians.
If it was decided to book half of the costs in Santander Bank Polska – as some analysts assumed – this expense would amount to approximately PLN 425 million for this bank, which would constitute 23.5 percent. its operating costs from 2025 and the same part of the net profit from continuing operations achieved in the third quarter of 2025.
The analysts we talked to suggest that it would be better to book all integration costs in 2026 so as not to “spoil” the result in the following years, when interest rates will be lower. It is unlikely that significant costs will be booked in the fourth quarter of 2025 due to the planned CIT tax increase (it is to apply from 2026, but the fate of the act is not certain due to the president's position).
Will Santander's systems be used after the transaction?
Our unofficial information shows that there were discussions on when the ownership of the shares would be transferred. According to one version, this could happen in December (which means that Erste would have to consolidate the Polish bank already in the fourth quarter results, so it would have less time for it). In the second scenario, the shares could be transferred in the first days of January. The rebranding would be completed six months after the transfer of shares, i.e. by approximately mid-2026.
The experts we talked to point out that the integration of Santander Bank Polska with Erste Group in terms of IT may be a bit of a challenge and it will not be a simple “overhaul” of systems and transfer of the customer base. This may apply to many different systems and functionalities. Some time ago, the Polish bank abandoned its own mobile and online banking system and moved to a solution provided by Banco Santander. It may be that for some time after the legal merger, the Polish bank will continue to use Spanish solutions, which will increase the costs of integration.
This may include, among others: online and mobile banking, for which Erste uses the George system. Apparently it is an efficient and modern solution, but – according to our information – it will undergo a significant update in two years and perhaps there is no point in transferring customers before it is carried out. Question marks in this regard may also apply to investment banking.
The takeover of Santander is an important operation for Erste
The transaction will be a milestone for Erste Group. Acquisition of a Polish bank (based on results from the end of 2024) will bring 6 million new customers to the Austrian group. Taking into account that it has 16.6 million of them, this means an increase in their number by more than a third, to 22.6 million (pro forma). The increase in assets thanks to the transaction will amount to approximately EUR 67 billion, to EUR 421 billion, net loans will increase by EUR 37 billion, to EUR 255 billion, and deposits will increase by over EUR 50 billion, to EUR 292 billion.
The management board indicated that the acquisition could increase Erste Group's profit from EUR 3 billion annually to approximately EUR 4 billion, which would mean achieving a return on shareholders' equity (ROTE) of approximately 19 percent. and it would give 20%. increase in earnings per share (i.e. by approximately EUR 10).
However, it is worth remembering that Santander Bank Polska will soon sell 60 percent. SCB shares to SCF for PLN 3.11 billion to the Spanish parent company. This will also result in a reduction in the balance sheet total and the loss of the number two position on the Polish market in terms of share in the loan market to Pekao.
Author: Maciej Rudke, journalist of Business Insider Polska
