Santander to pounce again in Poland

By bne IntelliNews February 1, 2012

bne -

Santander is in talks to take over an unnamed Polish bank, Chairman Emilio Botin announced to reporters on January 31, as the Spanish giant looks to take advantage of the crisis for a second time to increase its presence in one of Europe's choice growth markets.

Botin declined to elaborate on the negotiations, or even the name of bank under discussion. However, an acquisition to add to Santander's late entry to the Polish market via the purchase of BZWBK early last year has been reported about for the past 12 months, with KBC's Kredyt Bank the target. According to Dow Jones, the Spanish group has been in talks with private equity fund Apax about making a joint bid.

Analysts have pointed out that the Eurozone's largest banking group usually maintains a target of a 10% share in all markets in which it operates. Santander currently has around 7% of the Polish market and, despite the parlous state of the Spanish economy and banking system, has continued fishing for forced sales, whilst exhibiting the requisite patience.

At the same time, it's also possible that the long delay on the reported purchase of Kredyt may be provoked by Santander's need to hold fire whilst it builds capital to meet the July deadline for European banks to reach a Tier-1 ratio of 9%. That might explain the reported tie-up with Apax, with unconfirmed reports that Santander had a bid rejected on price in December.

Kredyt Bank shares jumped 13% on January 26 as speculation rose that a deal offering minorities a premium is imminent, reports Bloomberg, valuing the entire bank at PLN3.2bn (€763m). KBC is looking to offload its 80% stake, which would see any buyer have to make a mandatory bid at the stock's six-month average price.

On the other end of the deal, just like Allied Irish - from which Santander bought BZWBK in February - the Belgian KBC Group had to rely on a government bailout (€7bn in its case) to survive the last crisis, and needs to sell assets to pay that aid off. On January 19, German insurer Talanx announced the acquisition of Polish peer Warta from KBC for €770m, beating a host of rivals keen to expand in eastern Europe's largest insurance market.

Whilst many banks might be happy to offload subsidiaries in other Central and Eastern European markets if they could, few are keen to give up their businesses in Poland, which alongside Turkey is seen as one of Europe's most promising markets, combining high growth potential with market size and stability. However, faced with stalled public offerings at its Czech and Hungarian subsidiaries, according to Reuters, KBC is left with little choice but to raise the cash it needs in Poland.

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