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BNP Agrees to Buy Rabobank Polish Unit BGZ for $1.4 Bln

BGZ Bank
Passengers on a public tram pass a sign outside a Bank Gospodarki Zywnosciowej SA (BGZ) bank branch in Wroclaw. Photographer: Bartek Sadowski/Bloomberg

BNP Paribas SA, France’s biggest lender, agreed to buy Rabobank Groep’s Polish bank for about 1 billion euros ($1.36 billion) as it seeks to expand in the European Union’s largest eastern economy.

BNP Paribas will take over the Dutch bank’s 98.5 percent stake in agricultural lender Bank Gospodarki Zywnosciowej SA, Utrecht, Netherlands-based Rabobank said today in an e-mailed statement. BNP said the purchase will add to earnings per share right away.

The Paris-based lender beat Italy’s UniCredit SpA and Spain’s Banco Santander SA, which also bid for the asset in Poland, among Europe’s most active markets for takeover deals involving banks and insurers since 2010. PKO Bank Polski SA, Poland’s biggest lender, agreed in June to buy Nordea Bank AB’s Polish assets, while Santander acquired Bank Zachodni WBK SA last year and merged it with Kredyt Bank SA in January to create the country’s third-largest bank by assets.

“Both banks fit each other as BGZ has a strong presence in agribusiness and private banking, while BNP in Poland specializes in retail and corporate businesses,” Pawel Kozub, an analyst at UniCredit SpA in Warsaw, said by phone today. The merger’s success will depend on “how deep the restructuring of the new entity will be,” especially since neither of the two banks “has showed high profitability so far” in Poland.

Shares Jump

BGZ, as Rabobank’s local unit is known, has a market value of 3.83 billion zloty ($1.24 billion). Its shares jumped 4.2 percent to 74.8 zloty as of 9:38 a.m., the highest level since BGZ made its debut on the Warsaw Stock Exchange in May 2011.

The bank had assets of 35.8 billion zloty at the end of September, while its nine-month net income jumped 73 percent to 134.3 million zloty from a year earlier, BGZ said in a regulatory filing on Nov. 5. Bank Pekao SA, majority-owned by UniCredit, is Poland’s second-biggest lender. BNP’s Warsaw-based unit is the country’s 12th-largest bank with 21.1 billion zloty of assets.

“The acquisition of Bank BGZ constitutes a major step toward attaining a critical size in Poland,” BNP Paribas Chief Executive Officer Jean-Laurent Bonnafe said in the statement. “The transaction will establish the BNP Paribas Group as a reference player in Poland’s banking sector.”

The takeover will cut the Paris-based firm’s core Tier 1 capital ratio, a measure of a bank’s financial strength, by about 15 basis points, according to the statement.

Selling Assets

Rabobank has been selling assets as it seeks to boost its core Tier 1 ratio to at least 14 percent by 2016 from 12.9 percent on June 30. A 1.5 billion-euro book gain on the sale of its asset-management unit Robeco to Orix Corp., which it will book in the second half of this year, shriveled as the lender was fined 774 million euros by regulators for rigging interbank lending rates.

Italy’s UniCredit SpA and Santander SA in October said they were also bidding for Rabobank’s unit. Polish regulator Chairman Andrzej Jakubiak last month said the watchdog would be “very careful” when it comes to further banking mergers in Poland as “concentration” on the Polish market is “close to optimal,” he told Bloomberg Businessweek Polska on Nov. 4.

Lukasz Dajnowicz, a spokesman for the Polish regulator, declined to comment on the transaction when reached by Bloomberg News today.

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