GE Capital has agreed to sell Polish unit Bank BPH to Alior Bank, after stripping out the mortgage portfolio, the US giant announced in a statement on April 1.

GE has been trying to offload BPH since 2014, but the huge uncertainty hanging over the Polish bank sector – not least because of the government’s plan to force lenders to convert forex mortgage loans - has all but stalled M&A during that time. Alior, which is fronting a push by state-controlled insurer PZU to build a new Polish banking group, failed in talks late last year to agree a valuation. PZU owns 25% of Alior.

BPH will first be split into a ‘core bank’ and a ‘mortgage bank’. GE will retain US$3.9bn of mortgages (FX and local currency) and the bank’s asset management business, the US company said. The transaction is expected to “release approximately $0.2bn of capital to GE”. The US company had already written off PLN916mn (€215mn) in goodwill at BPH on March 21 as valuation expectations shrunk.

Alior said it has agreed to pay PLN1.22bn for GE's 87.23% stake in the core bank. That values BPH without its mortgage portfolio at PLN1.53bn, the buyer added, implying Alior paid just below book value at a ratio of 0.93.

The deal "confirms earlier announcements that Alior Bank will actively participate in the consolidation of the banking sector," said CEO Wojciech Sobieraj in a statement. "The merger of the two banks will enable the achievement of significant synergies, as well as a further increase in efficiency."

The deal, which is expected to close in the fourth quarter of 2016, is subject to several conditions including regulatory approvals, GE notes. However, banking market regulator KNF is unlikely to object. The watchdog, which has long pledged to oppose further consolidation of the sector, gave a nod of approval to PZU’s plan to build a banking group last year.

The deal will offer hope to other foreign owners seeking to offload Polish banking assets, both due to high competition on the market and pressures on individual groups. GE has been desperate to get shot of BPH as part of a global pullback from the financial sector.

Raiffeisen Bank International, which is seeking to dispose of assets across CEE, comes at the top of that list, having been trying to sell Polbank for 18 months or so. Societe Generale is reportedly mulling the sale of Polish unit Eurobank in response to the group’s worsening performance.

The bid to "repolonise" the bank sector via PZU was launched last year by the former Civic Platform government. It has now been revived by the new PiS administration.

Officials in Warsaw say the goal is to increase state ownership to at least 50%. Until PZU bought its stake in Alior in May - calling it the "first step toward consolidation of the Polish banking sector" - that share was limited to around 25%, mostly via goverment control of the country's biggest bank PKO.

Alior will issue new shares to raise funds for the acquisition of BPH, the bank says. Existing shareholders will retain pre-emptive rights and PZU has committed to subscribe to its pro rata share.