Societe Generale (SocGen) is reportedly mulling the sale of its Polish unit, Eurobank, in response to the group’s worsening performance, local press reported on March 18.
SocGen, which was eyeing an acquisition of a 25% stake in Alior Bank in early 2015, but was beaten to it by state-controlled insurer PZU, is now likely to become a seller itself, Puls Biznesu reports. That is despite the struggles of more than one international lender to offload Polish units over the past 18 months or so due to uncertainty stalking the sector.
However, there is speculation that Eurobank could well be the next acquisition of the PZU. The state-controlled giant was reportedly in talks with RBI over Raiffeisen Polank and GE on BPH last year, but failed to agree on valuation.
The insurer is currently seen as the only serious suitor for Polish banks, due to the state's ongoing efforts to force a conversion of forex loans on the banks. The government has also recently imposed a bank tax, while record low interest rates and raised contributions to the bank guarantee fund are also weighing on profitability.
SocGen's move comes on the back of the French banking group’s disappointing results in 2015, while the outlook for 2016 is not much more optimistic. The regulatory risk in Poland is another driver, according to the newspaper.
SocGen is now looking for cost savings, part of which may include the sale of Eurobank. The Polish unit recently announced it will lay of 500 people in the next five years, but its owners are reportedly probing the market for sale possibilities.
“Officially, the process has not begun but the market is being tested [for the sale],” an anonymous source told Puls Biznesu. The only viable buyer is PZU, the source claims, with the insurer being pushed to lead an effort to build a Polish-owned banking group. PZU is reported to have resurrected talks with on BPH.
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