State-controlled bank PKO BP and insurer PZU will buy into new Polish mining group PGG, the vehicle for the state rescue of the struggling coal industry,  local media claimed on April 18.

The move to pull the listed financial companies into the effort to save Kompania Weglowa (KW) - whose assets will be used to create PGG - will be preceded by conversion of PLN1bn (€230mn) debt held by five banks. The credit held by BZ WBK, PZU-controlled Alior, BGK, PKO, and BNP Paribas Polska will be turned into PGG equity.

PKO and PZU will then step in to buy the assets. Analysts note that this effectively sees the government set to use the banks to carry out policy. Warsaw says it hopes to finally officially establish PGG by April 24.

Both the current and previous governments have struggled to form a rescue plan for the country's largest coal miner. KW, which owns over a dozen mines, is struggling due to weak markets and inefficiency.

The five banks agreed earlier to give the company until the end of April to work out the creation of PGG, including clinching a key agreement on labour costs. The government is reported to have finally secured a deal with unions over the weekend, although it is yet to be signed, Rzeczpospolita reports, without naming its sources.

“[The proposed take over of PGG shares] would have a negative impact on the stock prices of PKO and PZU, as … it is even clearer that PKO and PZU will largely serve to fulfil certain objectives of the current government,” Erste writes. The market appears to be unfazed by the idea, with PKO and PZU stock largely unmoved by the report.

Banking stocks have been under huge pressure throughout the past 18 months or so due to uncertainty over government plans to force conversion of forex loans, as well as the new bank tax and low profitability. Their likely involvement in the coal rescue was also flagged earlier.

However, until now, the risk of political interference has largely been confined to Poland's large state-controlled utilities. On top of their involvement in the coal rescue, which was recently confirmed by Warsaw, the likes of PGE and Energa, as well as gas company PGNiG have long complained over political pressure on investment, and forced involvement in projects such as the hunt for shale gas and nuclear power. The trio is set to invest PLN1.5bn in PGG.