Pekao Sinks Most in 2 Years on UniCredit Stake Cut: Warsaw Mover

Bank Pekao SA, Poland’s second-biggest lender, dropped the most in more than two years after UniCredit SpA said it was selling as much as 9.1 percent of its local unit to free capital and increase earnings.

The stock slumped as much as 6.3 percent and was 5.3 percent lower at 157.7 zloty as of 12:50 p.m. in Warsaw, the biggest decline since November 2011. The amount of Pekao shares traded was 614 percent of the three-month daily average, according to data compiled by Bloomberg. The benchmark WIG20 Index fell 0.6 percent.

The sale of as much as 23.9 million shares is valued at 3.98 billion zloty ($1.3 billion) based on yesterday’s closing price. Italy’s largest bank is selling assets and cutting costs to improve profitability amid Europe’s sovereign-debt crisis. European banks, which control five out of Poland’s seven biggest lenders, need to shore up their capital as stricter regulations require them to repair balance sheets.

“UniCredit will have to offer a decent discount to the previous price to make the placement happen,” Armen Gasparyan in Moscow and David Nangle in London, analysts at Renaissance Capital Ltd., said in a note today. Pekao trades at two times its book value, above the industry’s average of 1.25 in eastern Europe, according to data compiled by Bloomberg.

UniCredit will retain at least 50.1 percent of Pekao after the transaction and has agreed to a one-year lockup period, it said in a regulatory filing late yesterday.

“The news should come as a surprise as UniCredit had not signalled its intentions to reduce its stake in its Polish subsidiary,” Michal Konarski and Mark MacRae, Warsaw-based analysts at Wood & Co., said in a research note.

Stake Sales

The announcement comes less than a week after the Polish government raised 5.24 billion zloty by selling a 12.2 percent stake in PKO Bank Polski SA, the country’s largest lender. Poland sold more than it initially planned on “high” demand, the government said on Jan. 24.

Alior Bank SA sold 2.1 billion of shares in its initial public offering in December and Carlo Tassara SpA, its founding company, plans to find a buyer this year for “at least 30 percent stake,” according to its IPO prospectus.

Investors are also “gearing up for a significant unloading of shares, around $1.4 billion,” from Bank Zachodni WBK SA, analysts at Renaissance Capital added.

KBC Groep NV, Belgium’s biggest bank, picked managers for a secondary offering of a 16 percent stake in Zachodni, Dziennik Gazeta Prawna reported on Jan. 17.

The recent supply of banking assets may lead to “pressure for a discount” during the planned sale of Zachodni, Jaromir Szortyka, an analyst at PKO Bank’s brokerage said in a note today.