GE's Polish Unit Writes Off Third of Its Value as Sale Nearsby
GE sees `low' probability disposal will exceed BPH book value
BPH is priced at 0.5 times its book value, trailing average
Bank BPH SA, whose parent General Electric Co. is seeking to sell, wrote off a third of its value after being notified by its majority owner that the price in a potential sale won’t exceed its net book value.
The Polish lender wrote off 761 million zloty ($201 million) from its 2015 balance sheet at the group level as well as 155 million zloty on an unconsolidated basis, citing “record-low” interest rates, higher capital requirements and a plan to convert mortgages in foreign currencies, it said in a regulatory statement on Monday. The shares gained 1.5 percent to 34.9 zloty at 2 p.m., valuing the company at 2.7 billion zloty.
“This is making the value more realistic and I’d link it with the potential sale materializing soon,” Marcin Materna, an analyst at Bank Millennium SA in Warsaw, said by phone.
GE is exiting the bulk of its lending business in the broadest revamp since the GE Capital unit destabilized its parent during the financial crisis. In Poland, where mergers among banks have been curtailed by uncertainty stemming from a draft law to convert $44 billion in foreign currency-denominated home loans into zloty, the U.S. company will exclude the Swiss-franc home loans from the sale, BPH said in a statement.
The Polish bank, which trades at 0.5 times its book value compared with 1.3 percent average for the industry, says the write-offs won’t impact its cash or liquidity standing. Its 2015 solvency ratio stood at 16.6 percent, almost two percentage points above the required minimum, according to BPH.
The lender, which will publish its full 2015 earnings later on Monday, also said its liquidity amounts to about 6 billion zloty, and GE may additionally boost it by about 9 billion zloty. Last week Rzeczpospolita newspaper reported Alior Bank SA may sign a deal to buy BPH in “coming days.”