Millennium reportedly keen to keep hold of Polish bank subsidiary

By bne IntelliNews April 2, 2013

bne -

It's off again. Millennium bcp is not set to sell its Polish unit, unnamed sources claimed on March 28, disappointing rising speculation that the Portuguese banking group would finally offload Bank Millennium.

Millennium bcp will keep hold of its Polish unit until at least the end of next year, the sources told Reuters, and look for other ways to pay off the €3bn in state aid it must settle before 2017. After spending much of 2011 on the block, Bank Millennium was taken back off the market by the Portuguese parent in the first half of 2012 following a group restructuring. However, speculation has risen in recent months that a sale is back on.

"From what I understand, people at bcp have given themselves until the end of 2014 to see whether they will be able to find the funds to pay off state aid it received," one of the sources said.

Having missed out on the buzz around Polish banking that persisted in 2011 and early 2012, when it was seen as the most promising sector in Europe - alongside Turkey - Millennium is unlikely to want to sell right now if it can avoid it. With economic growth at a crawl, problems at Polish construction companies add further risk to banks' balance sheets, suppressing likely valuations. On top of that, the recent deepening of instability across the Eurozone banking sector due to the crisis reduces the list of likely suitors.

In early 2012, all the clammer was still from large foreign investors looking to enter the Polish financial sector. Spanish banking giant Santander book-ended the acquisition spree with the purchases of Bank Zachodni WBK in March 2011 and Kredyt Bank around a year later. In between, Raiffeisen Bank International bought Polbank and Germany's Talanx teamed up with Japan's Meiji Yasuda to purchase insurance giant Warta. Meanwhile, Russia's Sberbank was reported to be desperate to gain a foothold, but has been rebuffed due to political opposition in Warsaw.

The latest round of speculation surrounding Bank Millennium has been restricted to domestic suitors. The CEO of state-controlled giant PKO said in February that the bank is interested in Millennium's "strong position in municipal areas" and developing segment of high net worth clients, but few other expressions of interest have evolved.

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