Italian banking group UniCredit announced on July 12 that it sold a 10% stake in Poland’s second largest bank by assets, Pekao, via an accelerated book build.
Speculation that UniCredit was interested in offloading a stake in its Polish business has been doing the rounds for some weeks. Pressure is building on the Italian banking sector. However, it had been assumed the Pekao stake would be sold to a strategic investor, with several groups suggesting interest.
However, for now at least, UniCredit has offloaded only a part of its 51% stake, raising PLN3.3bn (€749mn) from the sale to "unspecified institutional investors". At PLN126 per share, the price represented a discount of slightly over 6% against the PLN134.6 that Pekao traded at as the Warsaw Stock Exchange closed on July 12.
The move comes as part of a wider hunt by UniCredit to boost capital. The bank sold a 10% stake in online lender FinecoBank, raising €328mn, the same day. Following the sale, the Italian group has 40.1% in Pekao, which holds assets worth over PLN168bn.
“The placement will enable UniCredit to further strengthen its capital position while retaining a controlling shareholding,” the Italian bank said in a statement.
While Italian banks are racing to stabilise, the Polish sector, while in less danger, is still struggling somewhat. Profitability is being hit by regulatory burdens and record-low interest rates. Polish lenders are also operating in a highly uncertain environment, with a bill to force conversion of over half a million foreign currency loans looming. The latter in particular has led to a drop in valuations and all but stalled the M&A market over the past 18 months.
However, movement has started to occur as banking groups looking to exit adapt by carving out the foreign currency loan portfolios and new suitors emerge. The PiS government has been encouraging a plan by state-controlled insurer PZU to build a new banking group. Alior - in which PZU is key stakeholder – agreed earlier this year to buy BPH from GE. PZU CEO Michal Krupinski said in late June he was eyeing Pekao.
Meanwhile, the drain on profitability is reportedly spurring some smaller lenders to seek opportunities to bulk up. A line of suitors is now reportedly eyeing Raiffeisen Polbank, from which Raiffeisen Bank International (RBI) has now said it will carve forex loans. The Austrian bank has been trying to sell the unit for around 18 months.
In late May, it was suggested UniCredit was also mulling sale of a stake in Turkish bank Yapi ve Kredi Bankasi. The Italian group is carrying out sales in search of capital, as it trades at just 0.2 of book value, a manifestation of wider problems in the Italian banking sector, burdened with some €360bn of non-performing loans.
UniCredit is thought to need as much as €8bn in new capital, versus a market capitalisation of €11bn. Rome is currently locked in talks with Brussels over plans to injected a huge volume of capital to stabilise the Italian banking sector.