PKO reportedly bids for Raiffeisen's Polish unit

By bne IntelliNews June 14, 2016

PKO BP has tabled a non-bonding offer to buy Raiffeisen Bank International's (RBI) Polish unit, newswires claimed on June 14.

If the report by Bloomberg quoting unnamed sources is accurate, then it positions Poland’s largest lender as the only potential competitior to Alior Bank for Raiffeisen Polbank, and potentially sets up a scrap between two state-controlled giants. Both PKO and Alior's owner, insurance giant PZU, are state-controlled. The Polish government has said it wants to raise state ownership of the banking sector.

RBI will be delighted to see any element of competition. The Austrian lender has been looking to sell its Polish unit for close to 18 months, but the M&A market in the banking segment has been stalled by a combination of negative factors. That has seen the project for PZU to build a major Polish owned banking group as the only player in town for some months.

Polish banks’ profitability is hurting because of record-low interest rates and regulatory burden. The sector is also awaiting a law to allow over half a million borrowers to convert forex-denominated mortgages, with billions in costs likely to be heaped on lenders.

Under pressure to sell as Polbank as part of a push to scale back operations in CEE in a bid to stabilise its balance sheet, RBI has recently pledged to split off the forex loans portfolio. Meanwhile, Poland’s financial market regulator KNF gas recently given RBI more time to carry out an IPO, to which it committed when it bought the unit in 2012.

PKO BP’s CEO Zbigniew Jagiello said earlier this week that the state-controlled lender was “ready” to buy, although he did not provide any hints regarding targets. Alior Bank, in turn, said on June 14 its focus is on integrating the recently acquired from GE Capital bank BPH, with any other takeovers “unlikely” at the moment, Alior’s CEO Wojciech Sobieraj told PAP.

However, KNF is likely to have something to say about developments. The watchdog has spent years insisting it would block any attempt by the country's largest banks to push further consolidation of the sector. It has also regularly stressed its support for the PZU project.

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