Polish insurance giant PZU is set to revive its quest to build a new state-controlled banking group, according to speculation reported on March 1.

Warsaw-listed PZU is again in talks over the acqusition of GE Capital’s local unit Bank BPH. The previous Civic Platform (PO) government had pushed PZU to lead a "repolonisation" of the banking sector, but the huge risks hanging over lenders made agreement on valuation almost impossible. PZU said in October it pulled out of the talks to buy BPH. However, under the control of the new Law and Justice (PiS) government, the treasury now appears ready tp push the insurer to return to the idea.

“PZU should get interested in banking activity," Treasury Minister Dawid Jackiewicz told local media last week. "The capital [PZU has should be] invested in the banking sector in order to strengthen Polish capital in that sector." The supervisory board appointed Michal Krupinski as new CEO of PZU on January 19.

The insurer bought a stake in Alior Bank in late May. The deal was marked as a beginning to building a Polish capital group at the time, but talks with BPH, and most likely Raiffeisen Bank International's Polbank, broke down ahead of the elections won by PiS in October.

Meanwhile, GE Capital wants to take advantage of the government’s statist stance and has halted talks with other potential suitors, accoridng to “unofficial sources” cited by Puls Biznesu. Billionaire Leszek Czarnecki - owner of financial conglomerate Getin Holding - as well as UniCredit's Bank Pekao have been mentioned as suitors previously.

However, the US giant, which is shedding bank assets acoss several European markets, now hopes to sell BPH to the state. That would mirror the deal it did in 2014 to unload Hungarian unit Budapest Bank. PiS has made no secret of its admiration for the nationalist and populist Fidesz government in Budapest, and is copying several of its polices.

Should the deal go through, it would see the banking M&A market freed after being stuck for the past 18 months or so. Prevoiusly blocked by regulator KNF over concerns of further consolidation, uncertainties hanging over the sector have then stalled the market. Lenders are still awaiting a credible calculation of costs of a proposed bill to allow conversion of CHF loans, an issue that has plagued them since the Swiss currency spiked in January 2015.

RBI has reportedly sent out invites to negotiate a deal for Polbank, as time pressure is mounting. RBI has to float the unit on the Warsaw bourse by June, in line with commitment to the Polish regulator KNF. The Austrian bank is now also mulling separation of its CHF portfolio, according to claims in the media. Bank BPH is also working on a similar solution.

The watchdog could stand in the way, however, according to Erste. “We are not sure whether KNF will let those two stand-alone CHF mortgage banks function, unless they are not financed with deposits,” analysts at the Austrian rival to RBI suggest.