The Polish financial market regulator KNF has rejected a proposal from Austrian banking group RBI to “alter the method of realisation” of RBI’s commitment to floating at least 15% of its Polish business Raiffeisen Bank Polska by June 30, the KNF said on June 13.

The decision puts RBI under considerable pressure to carry out the IPO of RBI’s Polish unit in under three weeks in unfavourable market conditions that have hit valuations.

In early June, KNF said it suspended working on RBI’s IPO prospectus for Raiffeisen Bank Polska after a request from the bank. The Austrian group sought agreement from the KNF to postpone the sale amidst valuation concerns, and there was also speculation that it could seek to revive talks to sell the unit, which would release it from its commitment to float the shares. A source in the bank told bne IntelliNews last week that the bank was hopeful to agree new terms with the regulator.

KNF has stuck to its guns, however, saying there will be no change to RBI’s commitment. “RBI is obliged to carry out the IPO of Raiffeisen Bank Polska by June 30, 2017,” the regulator said in a statement.

“We continue our preparation for the IPO,” RBI’s spokesman commented to bne IntelliNews. He did not elaborate on the tight timing the company has to carry out the offering.

The KNF can impose penalty fees on companies in case they do not follow commitments or other regulations of the financial market.

RBI's commitment to list the stake was a condition of KNF’s consent in 2012 for the Austrian bank's acquisition of the unit from Greek lender Eurobank. However, pricing conditions in the Polish banking market remain unfavourable as lenders continue to face pressure from the government to unwind huge Swiss franc mortgage loan portfolios.

While talk of forced conversion is off the table due to concerns over the stability of the sector, a bill in parliament would require banks to refund forex spreads to customers. Meanwhile, the bank tax introduced last year, the low interest rate environment, and raised capital buffer requirements are all impacting on profitability. Raiffeisen Bank Polska reported a net loss of PLN76mn (€18.1mn) for the first quarter.