PZU, Seeking Higher Returns, Seen Buying Banks, Coal Group

PZU SA, Poland’s largest insurer, may buy stakes in two of the country’s banks and in a coal producer as it seeks to boost returns from investments during a period of record-low interest rates.

PZU may acquire the 26 percent of Alior Bank SA held by Italy’s Carlo Tassara SpA, its dominant shareholder, and a second unidentified bank that may later be merged, said a person with knowledge of the situation who declined to be identified because the matter is private. It’s also considering buying a minority stake in Nowa Kompania Weglowa, which the government is creating to help revamp the coal industry, said two other people with knowledge of the situation on Friday.

The insurer isn’t interested in buying a stake in the Nowa Kompania group, it said on its website later in the day.

“The company is heading in many directions in search for returns, from buying health care companies to acquiring banks and miners,” Dariusz Gorski, an analyst at Bank Zachodni WBK SA in Warsaw, said by phone. “The question is which of those plans materialize and what the profits are, as some of those plans seem to be politically driven.”

PZU, in which the government has a 35 percent controlling stake, is one of the most profitable financial companies in Poland and has stepped up its expansion plans since Chief Executive Officer Andrzej Klesyk took the post in 2007. Klesyk needs to boost returns as record-low interest rates squeeze earnings and swings in investment income drove profit to the steepest decline in three years in the third quarter.

PZU shares dropped as much as 4.5 percent on Friday to the lowest intraday level in more than a month. The stock traded down 1.4 percent at 480.2 zloty as of 4:22 p.m. in Warsaw.

Alior Growth

The company has as much as 7 billion zloty ($1.9 billion) in its war chest, Klesyk said in December.

Alior, which owns the fourth-biggest branch network in Poland, has been among the fastest-growing banks since its creation in 2008. Its stake was worth about 1.66 billion zloty at Thursday’s closing price.

Yesterday, a Warsaw-based newspaper said PZU wants to merge Alior and the Polish unit of Raiffeisen Bank International AG. The insurer will also look at General Electric Co’s Bank BPH SA, Puls Biznesu newspaper reported, without saying where it got the information.

General Electric was considering selling its Polish lender even before the U.S. conglomerate announced this month that it was pulling out of the financial institution to focus more on its industrial business. Raiffeisen Bank is also seeking to sell its Polish unit.

Strategic Plans

Once the banking tie-up is complete, PZU may sell part of its stake in the combined lender, the person said.

Helene Zaleski, Alior’s supervisory board chairwoman and Tassara’s representative, did not respond to calls to her mobile phone. Michal Witkowski, a spokesman for PZU, said the insurer doesn’t comment on “speculation.”

Separately, the company may buy a minority stake in the Nowa Kompania coal group, the people said.

PZU isn’t in “any formal process to finance mergers and acquisitions of coal mines,” Ryszard Trepczynski, a member of PZU management board, said in an interview in Katowice, Poland, on April 21. “The situation” with mines is “complicated” and PZU is waiting for the effects of restructuring.

The company may help finance potential acquisition of a state railway power unit though. “We’re looking to diversify our investments,” Trepczynski said.

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