Patrik Tkáč: Meet the Slovak contender

Slovakia-based financial group J&T invites a lot of controversial and conflicting reactions. We spoke with the chairman of J & T Banka about their business model, their vision of private banking and their international expansion plans.

Could you introduce your company, and tell us something about its origins?
We started with a company called J&T Securities, established as a small brokerage house in Christmas 1993. Other J&T companies (J&T Banka, J&T Asset Management, J&T Finance Group, etc.) were founded later, and during a reorganization in 1995 we created a holding structure upon which all other J&T companies are developed. We are a family-owned financial holding. Only the media gave us this image of being a financial group, because it is a term that describes companies similar to ours. But we feel a big difference between us and, for example, PPF or Penta. What we have in common is that we fight for what we call opportunistic business, in which we are buying everything that we can possibly acquire for a lower price than we believe it will bring in the future. But groups like PPF and the others differ in the way they are organized. For example, PPF has a strong retail business, and we don’t – we are more focused on private banking, and this is a defining aspect of our entire company.

You mentioned Penta, PPF, etc., saying that you are more or less after the same type of business…
Only in regard to opportunistic business, but we are not competing in the strategic areas. We compete if the state is privatizing, or if someone is selling something that all of us consider an investment opportunity. Then we have a common ground for competition, but only within a small area of the Czech Republic, nowhere else. From a strategic point of view, we are trying to buy or acquire private banking boutiques or banks in Europe, but this is not the target of Penta or PPF, I believe. Also, we are not buying insurance firms in China…

When you see PPF going to China, what do you feel?
We feel envy (laughs). No, we feel that we want to go to China too, but we’re too small for such a big market. For us, the next step is to start doing business in Balkan states.

You present some of your acquisitions as investments you made for your clients, but you still manage these companies for them. Can you explain how such transactions work?
90% of these acquisitions originated on the basis of our ideas, or from opportunities that were on the public market. We always have the option of buying assets, to improve them – we’re very good at it – and then sell them. We’ve found that we can sell them at good prices, and then use the money for further transactions, again making money. At the same time, they’re still good investments for our private clients. For example, we would have sold ČKD Blansko long ago to a strategic investor, but because our clients invested in it through us we managed their investments for them. Incidentally, this is the main difference between our definition of private banking and that of other banks.

Which areas of J&T do you consider strategic?
Primarily private banking itself. Today our infrastructure adapts to it to a great degree, we invest in it, and it’s our main strategic activity. Secondly, it’s building the utility part of the group (ed. note: J&T owns a 34% stake in Pražská energetika and is a major ČEZ shareholder), and I’d also include our real estate division on the same level. In Slovakia we’re among the market leaders in nearly all real estate development areas.

Quite a lot of people developed a sort of rumor about your group, saying that it’s not so clear where the money comes from and so on. Why is there this cloud of non-transparency around you?
It’s because they are not working with us. Nobody who is in direct contact with us will say this; it doesn’t matter if he makes a deal with us or knows us personally. There is one very simple way to check – if you work with some kind of black money or anything like that you can’t be under state regulation as we are (J&T Banka is supervised by the Czech National Bank and J&T Asset Management by the Securities and Exchange Commission). Another thing is our auditors – ask KPMG if they will take a risk on some doubtful figures. Everyone knows the problem of Enron… believe me, now they are coming down on us ten times harder.

When looking at your “hobbies” – expensive cars, a football club – you appear to have certain characteristics in common with Russian oligarchs. They also buy football clubs, drive a Lamborghini or Ferrari…
I’ll tell you…we were anchoring our boat in Monaco near that of Mr. Abramovich (ed. note: oil magnate and Chelsea football club owner), and it’s a completely different level! We have a nice big boat, but compared to Mr. Abramovich’s it looked like a rescue boat! But the nicest girls were on our boat…(laughs).

How would you describe the segment you are going after in private banking? Is there, for example, an “entry ticket” in the neighborhood of 5 or 10 million crowns?
No, our best private clients are not those who deposit money with us, but those who are bringing some other added value. For example, they may own companies, and they allow us to help especially in the area of investment banking…and at the end we help them sell the company and invest the money once again with J&T. They not only deposit their money, but also take part in our projects. So you see that our definition of private banking is much wider than standard banks.

What do you think is the size, or potential, of the Czech private banking market?
Including the Slovak Republic, our list of important persons numbers about one thousand.

Clients or targets?
Targets.

Who are they?
Leading the list are restituents, followed by privatizers – these are a very important part of our clients, people who made their money in the last 10 years. Finally, there are the people associated with culture, sport, or politics.

In your balance sheet, what is the proportion of businesses that originated or are based in Slovakia compared to Czech ones?
I think it’s half and half. The Czech Republic is stronger with companies, Slovakia is very strong with real estate. There are not so many potential acquisitions in Slovakia…we still see much more opportunities in the Czech Republic, and not only in terms of privatization. There are still many Czech owners, and not many of them will keep these assets forever, they just want to wait for them to peak and then sell. Of course it’s come about this way because we were one of the first players on the real estate market in Slovakia, but it’s very difficult to enter this market in the Czech Republic.

A life in numbers
1973 born in Bratislava
1994 obtained broker’s license from Slovakian Ministry of Finance and was co-founder of J&T Securities, s.r.o.
1996 graduated from the Faculty of National Economy at the Economic University in Bratislava
1997 became member of the board, J&T Finance Group, a.s.
1998 named chairman of the board, J&T Banka, a.s.

As a product of the mid-1990s, there are some parallels between you and Viktor Kožený. In terms of age, investment banking, quick success, and so on…do you feel any similarities with what he did?
That’s a sensitive theme (laughs). To be honest, I am not sure if he really created some problem, or if his problem was that he didn’t solve it. He was clever enough to do things in such a way that he didn’t break the law – I will be very surprised if someone proves that he did. I think it’s more about morality, especially this thing with American investors doing business in Azerbaijan.

So you don’t feel any comparison with him of any sort?
Not like that. He was very good in retail, and we are not – that’s one difference. The second thing is that he created very nice structures for dealing with the money, he created wonderful holding. We are very similar in this regard; we are also creating nice structures for ownership, for financing, for future profit…but I believe from a moral point of view we were much better than Kožený, because there is nobody in retail who can complain about us. We could also have conducted operations that would not break the law, but which would give the people less money – but we didn’t. We gave them much more money than was necessary from a legal point of view, and that, I believe, is the real difference.

How would you describe yourself in three words?
A free man.


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