BCP sells stake in Polish unit through accelerated book building

By bne IntelliNews March 26, 2015

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Portugal’s Banco Comercial Portugues (BCP) launched the sale of a 15.41% stake in its Warsaw-listed unit Bank Millennium via an accelerated book building on March 25. The offer comes amid great uncertainty on the Polish market, with several banks already on the block, and regulators pressing lenders to find their own solution to the problem of Swiss franc mortgages. 

“The transaction is designed to further strengthen the capital position of BCP,” Bank Millennium reported. BCP will “remain a long-term majority shareholder in Bank Millennium,” the Polish bank noted.

The European Bank of Reconstruction and Development  (EBRD) has already said it will take a 3% stake via the offer. 

Lenders have been urged recently by the central bank to come up with a systemic solution to help reduce the risks connected to over 500,000 CHF mortgages. While that suggests the government does not plan to force a painful solution on the banks, the issue remains hanging over them.

The central bank warned it will recommend mortgage lending restrictions if the banks do not come up with a solution. Financial market watchdog KNF said it will seek to block dividend payouts at banks with large portfolios of CHF-denominated mortgages. 

Such pressure has been weighing on the stock prices of Polish banks since the CHF crisis hit in January, when the Swiss National Bank removed the cap on its currency. It has also hampered M&A deals in the sector. Clearly it doesn't make it the best time to sell a Polish bank, suggesting that Bank Millennium is keen to get cash in the short term.

Speculation that BPC might look to sell the unit has been doing the rounds for years. Millennium has often been mentioned as the prime target for Poland's biggest lenders, which have been fighting to gain market share via M&A for some time. However, the Portuguese parent has improved its financial standing recently.

The offer of the stake also coincides with the launch of an IPO by Idea Bank, a unit of Getin Holding - another Polish financial house weighed down by CHF loans. Idea hopes to raise around PLN1bn (€244mn) from an issue of up to 20mn shares.

At that price, the bank is being valued at almost double its book value and speculation was already rife that it would struggle before meeting the Millennium offer on the road. Book building for the Idea listing is ongoing and is planned to last until March 31.

Raiffeisen Bank International's Polbank unit is also up for sale as the Austrian lender retrenches after making its first annual loss last year. However, the sale has been complicated by the KNF's insistence that RBI fulfil its pledge to float some Polbank shares by the end of 2016.

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