Pekao Drops to Two-Week Low as UniCredit Said to Mull Stake Sale

  • UniCredit is said to be considering options to boost capital
  • Italian bank has $5 billion stake in 2nd-biggest Polish lender

Bank Pekao SA slumped to a two week low after 50.3-percent owner UniCredit SpA was said to be considering selling a stake in Poland’s second-largest lender among other measures to boost capital.

The shares in Pekao fell as much as 3 percent and traded 2.1 percent lower at 148.4 zloty as of 11:11 a.m. in Warsaw, making the bank the second-biggest loser in the country’s benchmark WIG20 index. UniCredit, among Europe’s least capitalized banks, is considering the sale of a stake in its online broker FinecoBank SpA as well as reviewing its holdings in Pekao and Turkey’s Yapi ve Kredi Bankasi AS, according to people with knowledge of the matter.  

The review comes as Polish bank valuations are hit by a new levy imposed on their assets and political debate about potentially costly plans to convert foreign currency mortgages into zloty. The WIGBank index grouping 15 Warsaw-listed lenders dropped to a price to book value of just above one in January, the lowest since 2009. It’s now trading at 1.1 times, compared with 1.6 times a year ago.

While the new bank tax is set to siphon off about a third of the industry’s annual profit this year and the conversion could push some of the lenders into losses, Pekao is in a relatively good position as it has almost no exposure to foreign-currency mortgages. It’s one of three Polish lenders whose shares increased this year and it’s now trading at 1.6 times book value. The 50-percent stake UniCredit holds in the bank is valued at 19.5 billion zloty ($5 billion).

“Pekao’s valuation is very rich,” Magdalena Komaracka, an analyst at Erste Securities Polska SA, said in a note. “Thus, the market could start speculating that the bank will be sold at a discount.”

UniCredit joins Raiffeisen Bank International AG, which is also seeking to sell its Polish unit, while General Electric Co. in April agreed to sell its local lender at about 0.93 times its book value.

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