February 16, 2017 / 12:59 PM / a year ago

UPDATE 1-Poland's mBank bets 50 mln euros on home-grown tech start-ups

(Adds more details, quotes, and comment)

By Marcin Goclowski

WARSAW, Feb 16 (Reuters) - Poland’s leading internet bank mBank is setting up a 50-million-euro ($53 million) fund to buy and develop home-grown technology start-ups rather than letting them go abroad.

With 5 million customers in Poland and neighbouring countries, mBank was built out of former corporate lender BRE Bank and is owned by Germany’s Commerzbank.

“So far if someone in Poland had a good idea the best advice ... was ‘just buy a ticket to San Francisco or London and develop your idea there’,” Jaroslaw Mastalerz, head of the fund, and former mBank CEO responsible for IT and retail, said.

MBank’s first mover advantage helped it to build strong internet-based retail operations and its technology is regarded as the reference point for the sector in Poland.

It now wants to buy companies in areas such as automation, cyber security, data analytics and digital marketing, introduce bring them into mBank, and once they are developed try to find clients for them within banks globally.

“There are plenty of companies in Poland who have no ability to reach big venture capital funds, gather financing and reach the scale. We want to create an address in Warsaw for them,” Mastalerz added at the fund’s launch on Thursday.

MBank said it expects to invest in at least seven companies during the fund’s projected life of 10 years, although the plan got a lukewarm response from some analysts.

“50 million euros is their quarterly profit. Their capital ratios are very high, so they are able to engage some excess capital in higher-risk investments,” Kamil Stolarski, an analyst with Haitong, said.

“But to exist in venture capital one has to have a team of people and competencies. I‘m afraid that little will come of this,” he said.

MBank shares, which are up by more than 20 percent this year, had risen by 0.2 percent at 1148 GMT, underperforming the main index of the bourse.

MBank’s valuation has risen on better-than-expected results and comments by Law and Justice (PiS) head Jaroslaw Kaczynski suggesting the ruling party scrap plans to force banks to convert foreign currency loans into zlotys at a loss. ($1 = 0.9408 euros) (Writing by Lidia Kelly and Anna Wlodarczak-Semczuk; Editing by Jason Neely and Alexander Smith)

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