PKO Said to Plan Bid for Raiffeisen’s Polish Unit This Month

  • Plan dovetails with government efforts to ‘re-Polonize’ banks
  • Biggest Polish lender may need to raise cash for deal: analyst

Poland’s largest lender PKO Bank Polski SA is planning to bid for Raiffeisen Bank International AG’s unit in the country, as the state-run company seeks to reinforce government efforts to boost domestic ownership of the financial industry, according to a person familiar with the process.

Raiffeisen’s Polish assets, including its corporate banking unit, wouldn’t overlap much with PKO’s existing business, said the person, who asked not to be named because he’s not authorized to speak about it. The deadline for placing non-binding bids is June 30, and then investors will have until early September to submit final offers, the person said.

Polish banking valuations have slumped in the past year as the government imposed the European Union’s highest tax burden on lenders and authorities are debating a costly bailout plan for the nation’s foreign-currency borrowers. The ruling Law & Justice party, which won two elections last year after pledging more state control over the economy, seeks to “re-Polonize” banks, where foreign investors own about 60 percent of the assets.

“The news is a surprise for the market as until recently PKO said it wouldn’t engage in buying local lenders,” Dariusz Gorski, an analyst at Bank Zachodni WBK SA, said by e-mail. Raiffeisen’s unit may cost more than 3 billion zloty and the Polish bank may need to raise capital for the deal, he said.

PKO’s shares advanced 1.1 percent to 23.75 zloty in Warsaw after initially declining on the news, while Raiffeisen fell 1 percent to 10.81 euros in Vienna. Poland’s WIGBank index has tumbled 24 percent in the last 12 months, compared with a 17 percent drop by the broad WIG gauge and a 12 percent slide in the MSCI emerging markets index, adjusted for currency swings.

Dividend Risk

PKO’s Chief Executive Officer Zbigniew Jagiello said on Monday that his bank, which took over Nordea Bank AB’s Polish unit three years ago, is now “ready” to buy local competitors. He didn’t specify any targets. The Warsaw-based bank said two weeks ago that its dividend payout this year was dependent on whether it purchases another bank in 2016, as well as potential regulatory changes.

The sale of its Polish unit is a key plank in Raiffeisen’s plan to restore its capital ratios after posting a record loss in 2014. PKO has 267.1 billion zloty ($67.7 billion) of assets, compared with 40 billion zloty for the Austrian bank’s unit. Raiffeisen also has the equivalent of 12 billion zloty in foreign-currency mortgages, which it plans to keep.

PKO spokesman Lukasz Swierzewski declined to comment when reached by phone today. Raiffeisen spokeswoman Susanne Langer declined to elaborate on the sale process and potential bidders.

Last month, Raiffeisen agreed with the Polish financial market regulator to sell its unit and carve out its portfolio of Swiss franc-denominated mortgages this year. If it fails to do so, the Austrian bank would have to honor an earlier pledge to list the unit on the Warsaw Stock Exchange.

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