Polish watchdog KNF demands sale of FM Bank by May

By bne IntelliNews November 19, 2014

bne -

 

The Polish Financial Supervision Authority (KNF) has ordered Abris Capital Partners to complete the sale of its entire stake in FM Bank PBP by the end of April. The move is just the latest in the ongoing fight between Poland's financial regulator and the private equity firm over the mid-sized lender. 

 KNF announced the new deadline following a scheduled meeting on November 18. The decision was passed on a 3:2 vote, with one abstention, reports PAP. The regulator's officers voted in favor, but were opposed by representatives of the finance ministry and bank guarantee fund BFG. A central bank representative abstained. 

KNF says the demand stems from the failure of Abris to live up to earlier pledges made on the divestment. In May, Abris filed an official complaint with the Polish state and foreign affairs ministries demanding damages due to KNF's decision ordering it to sell its holdings. The regulator had issued an order demanding the sale by the end of 2014, but withdrew it in July citing legal risks. 

According to media reports, Abris expects to find a new investor for FM Bank PBP - one of the smaller commercial lenders in the country - by the end of the year. However, the deal is unlikely to be completed before the start of 2015. 

Reports in early November claimed Hungary's top bank OTP has made a bid. Polish mid-sized banks Alior Bank and BOS Bank, and private equity firm AnaCap Financial, are also reported to have submitted offers for FM Bank, which has a book value of PLN300mn, according to Reuters

Abris ran into trouble with KNF earlier this year. The regulator disagreed with board changes at FM Bank, and claims the fund has violated obligations made when it bought the business. The bank was created last year through the merger of two smaller institutions. 

Abris denies any wrongs. However, KNF has refused to allow the Luxembourg-registered fund to exercise its voting rights over the bank, and in April demanded that it sell by the end of the year. While that deadline was lifted in July, Abris's voting rights were not restored. KNF also made sure to reiterate that it could force a sale at any time. 

Faced with repeat demands, and unable to exercise control over its investment, Abris threw in the towel and began to hunt for a buyer soon afterwards.

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