Spain's Santander and Belgium's KBC Group launched an accelerated process to sell a combined 21.4% stake in Poland's Bank Zachodni WBK on March 18. Potentially Poland's biggest ever public share offer, the deal will complete a series of share sales by the country's three biggest banks during the first quarter.
The sale of the stake is the final piece of the jigsaw that saw the Spanish banking giant oversee the creation of Poland's third largest lender in February 2012, when BZWBK was merged with Kredyt. KBC, which was forced to commit Kredyt to that deal as it strove to pay off a bailout from the Belgian government, will place a 16.2% stake in the market, while Santander will sell a stake of 5.2%. The deal will increase the free float in BZWBK to 30%, fulfilling the condition of the Polish banking regulator for approval of last year's merger.
The pair will offer up to 20m shares in a range of PLN240-270 each, with a final price due on March 21, BZWBK said in a regulatory filing, with the offer directed exclusively at institutional investors. Should it go through at the top of the range to raise PLN5.39bn (€1.3bn), the offer will set a new record in Poland, and take the value of this year's share issues on the Warsaw Stock Exchange to PLN14.9bn. That constitutes a record start for a year, according to data compiled by Bloomberg.
Even more noticeable is that practically all of that huge volume has stemmed from the banking sector. The deal will complete a set of stake sales from Poland's top three banks inside the first quarter. The Polish treasury sold a PLN5.24bn stake in PKO in January, as part of the state's privatization programme. That was followed the same month by a PLN3.7bn divestment by Italy's UniCredit from its holding in the country's second-largest lender, Bank Pekao. Despite the elevated risk of an overhang in the sector, BZWBK offered a standard lock up of 180 days following the closing.
BZWBK shares quickly recouped initial losses of around 2.3% in early trade, according to Bloomberg, to regain their opening price by mid-morning. That recovery came despite a drop of around 0.9% for Warsaw's benchmark WIG20 Index as the effects of the proposed Cypriot bailout spread across Europe.
The reaction of the stock thus far suggests that despite the avalanche of shares recently released onto the market, investor appetite for Polish banks remains strong. That gives a picture of investors shrugging off the fading economy, as well as the risks posed to the sector by the country's struggling construction companies, to focus on the sector's strong growth potential. Until the Eurozone crisis began to very clearly catch up with Poland in the second half of 2012, the country was widely said to have the most promising banking sector in Europe, alongside Turkey, with foreign banks clamouring to get their foot in the door.
Santander, which was thought to be struggling to find the capital to complete the deal for Kredyt as it spent much of 2011 talking to various potential partners, will maintain control of the merged bank, with a stake of no less than 70%, the statement said. The selling shareholders will grant underwriters the option to sell up to 10% of the final size of the offer (called a reverse greenshoe option) at a later date, it noted.
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