Polish financial market regulator KNF on August 2 gave Raiffeisen Bank International (RBI) a new deadline of May 15, 2018 to float 15% of its Polish unit.

Under the terms of its purchase of the business in 2012, the Austrian banking group was supposed to list Raiffeisen Bank Polska on the Warsaw Stock Exchange by June 30. However, RBI pulled the offer, citing insufficient interest. In the meantime, a deal to sell the lender to PZU broke down, with sources in Austria claiming the state-controlled insurer was offering too low a price.

KNF has, however, waived penalties against RBI for the failure to meet the deadline. A successful float on the local bourse is more important from the point of view of a “proper and safe development of the banking sector," the watchdog said. KNF noted that potential sanctions, such as suspending RBI’s voting rights, would weaken the “effectiveness of the process".

The regulator suggested to RBI that in order to improve the chances for a successful flotation, the Austrian bank could consider offering new shares instead of only existing ones. KNF also suggested the offer could also be opened to retail investors.

Raiffeisen Polbank, was required to list a 15% stake in return for KNF’s consent in 2012 for the Austrian parent bank's acquisition of the unit from Greek lender Eurobank. However, speculation that the June IPO would flop was rife since the day RBI announced the offer in May.

Pricing conditions on the Polish banking market remain poor as lenders continue to face pressure from the government to unwind huge Swiss franc-mortgage loan portfolios. Some half a million Poles have foreign-currency mortgages. Record low interest rates have long dragged on banks’ profitability as well.