PKO struggles to push Nordea deal past Polish bank regulator

By bne IntelliNews November 18, 2013

bne -

Polish state-controlled lender PKO Bank Polski announced on November 17 that it will repeat an offer to buy out minority shareholders in Nordea Bank Polska, as it tries to push through the takeover in the face of wariness from the banking regulator.

Poland's biggest bank, PKO agreed in June to buy Nordea Bank Polska - the country's tenth largest lender - from Nordea Bank. It also arranged to take on the local life insurance and financing businesses of the Scandinavian bank. Following that, in accordance with Polish financial market regulations, PKO announced a tender offer to minority shareholders in order to buy 100% of Nordea Bank Polska for PLN47.99 per share, reports Reuters.

However, PKO is still awaiting approval of the deal from the financial market watchdog KNF. That delay has already forced it previously to extend the tender deadline. However, the bank now says it will announce a repeated tender offer by November 25. "The bank maintains its intention to acquire all shares in Nordea Bank Polska according to the conditions specified in the Agreement," PKO said in a statement.

The announcement of the deal in the summer sparked speculation about a further wave of consolidation in the Polish banking sector, with leading foreign-owned banks such as Pekao and Bank Zachodni WBK reported to be keen to pin down targets to keep pace with PKO's growth.

KNF, which has a track record of patrolling the country's banks strictly, has repeatedly insisted that it would frown on further consolidation. The regulator has followed a strict regime over the last few years, setting strong demands when approving M&A deals and restricting dividend payouts in a bid to limit outflows of capital from Polish units to Eurozone parent banks. It claims that such action helped prevent the need for any bailouts through recent crises.

However, that has not prevented the top banks discussing their interest in targets in the media. A war of words broke out in late October as they jostled to stake their claim in the race to buy the country's 11th largest lender, agricultural specialist BGZ.

The deputy head of KNF reiterated the warning on October 22. Wojciech Kwasniak insisted the watchdog will ensure Polish banks maintain financial strength, and that it intends to keep the sector more fragmented than elsewhere in Europe in order to prevent to prevent a buildup of risk.

However, Reuters reported no one at KNF could be reached for comment on November 17. PKO has said that it expects the takeover of the Nordea assets to be finalised at the end of 2013 and 2014.

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