Polish Lender PKO Drops on Report CEO Jagiello May Be Dismissed

PKO Bank Polski SA declined on Tuesday after a newspaper reported that Poland’s largest lender may dismiss its Chief Executive Officer Zbigniew Jagiello this week.

The shares of the state-controlled bank fell as much as 1.2 percent and traded 0.8 percent lower at 29.45 zloty as of 1:14 p.m. in Warsaw, heading for the steepest decline since July 24. The benchmark WIG20 Index retreated 0.3 percent.

The Treasury Ministry plans to dismiss Jagiello at a supervisory board meeting on Wednesday, Puls Biznesu reported, citing unidentified people. Lucyna Stanczak-Wuczynska, a director at the European Bank for Reconstruction and Development, will become the new CEO, according to Puls. Jagiello has led the company valued at 37 billion-zloty ($9.7 billion) since October 2009.

“We are concerned that there might be a period of inaction at PKO” caused by frequent changes in management, analysts at BESI Grupo Novo Banco, led by Konrad Ksiezopolski, said in a note. The bank may have a new CEO again after the October parliamentary elections, BESI analysts said.

The lender fell 18 percent this year, exceeding the 14% drop in WIG-Bank Index. The gauge is heading for the worst year on the exchange since 2011 as the Law & Justice opposition party, which is leading in opinion polls, plans to introduce a new banking levy.

Polish lenders are also facing growing pressure from the ruling Civic Platform and the financial-markets regulator to fix the $38 billion loan portfolio in Swiss francs.

Spokesmen for the Treasury and the bank declined to comment when contacted by phone. Jerzy Gora, the supervisory board head, and Stanczak-Wuczynska didn’t respond to messages and phone calls seeking comment.

This information “increases political uncertainty around the banking industry, which is already battered by proposals to solve the Swiss-franc loan problem,” Marcin Materna, the head of equity research at Bank Millennium SA, said by phone.