Poland Favors PZU Buying UniCredit’s Pekao Unit, Szalamacha Says

  • Price remains main hurdle, Polish finance chief says
  • Szalamacha says he thinks a PZU, Pekao deal is probable

Poland favors government-controlled insurer PZU SA as the buyer for Bank Pekao SA, the country’s second-largest bank held by Italy’s UniCredit SpA, with the price representing the main hurdle, Finance Minister Pawel Szalamacha said.

Speaking to Bloomberg at the Ambrosetti Forum in Cernobbio, Italy, on Friday, Szalamacha said his government backs a possible deal but insisted this was up to the parties involved. “A decision on divesting is up to UniCredit, I know that executives of the Italian bank and PZU met in Milan to review options,” he said.

Asked if he was confident a deal can be reached, he replied: “I wouldn’t say confident, I think it is probable but I would leave this to the managements.”

UniCredit is considering selling its Polish unit as part of a strategy aimed at strengthening finances and boosting capital, people with knowledge of the matter said. Poland’s ruling Law & Justice party has made a “re-Polonization” of banks a priority as it seeks to boost the state’s role in the economy.

Main Hurdle

“I think that the main hurdle might be the price because UniCredit has different options, not that many, it would not be polite for me to tell about the options,” Szalamacha said. “Too much for the buyer, too small for the seller,” he joked.

UniCredit may tap shareholders for as much as 5 billion euros ($5.6 billion) and offload Bank Pekao and online lender FinecoBank SpA, having already sold more than $1 billion of shares in those companies in July, the people with knowledge of the matter have said. The lock-up period for the disposal of further Pekao shares ends on Oct. 11. Jean Pierre Mustier, the 55-year-old Frenchman who took over as the bank’s chief executive officer in July, said he will present a strategic plan before the end of the year.

In a separate interview with Bloomberg Television the minister said: “It’s UniCredit decision, it’s open and will be decided in Milan.” If they decide to divest, there are different options on the table. One of the companies which considers this move is PZU and they’re in open talks.”

Prized Lender

UniCredit’s sale kick-started a process through which the Polish government could gain control over one of its prized lenders, Poland’s Deputy Prime Minister Mateusz Morawiecki said following news that the Italian bank may dispose of its stake. Foreign banks including Banco Santander SA, Commerzbank AG, ING Groep NV and Citigroup Inc, control about 60 percent of Polish banking assets. If Polish companies bought Pekao, it would meet the government’s target to reduce non-resident ownership to about half of total assets.

Treasury Minister Dawid Jackiewicz said in June that state-controlled insurer PZU SA and the country’s biggest lender, PKO Bank Polski SA, have “capacity” for bigger takeovers, such as acquiring the units of UniCredit or Raiffeisen Bank International AG. PZU, Eastern Europe’s biggest insurance company, bought two Polish lenders in the past 15 months and seeks to hold 140 billion zloty ($35.7 billion) of bank assets by the end of 2020, it said on Aug. 24.

Polish bank valuations have been hit by a new levy imposed on their assets and a political debate about potentially costly plans to convert the industry’s $35 billion of Swiss franc-denominated mortgages into zloty. Pekao’s shares have declined 33 percent from last year’s high, compared with a 30 percent drop in Warsaw’s broad WIG index. Still, it’s price-to-book ratio exceeds 1.5, the second-highest among major Polish lenders.

— With assistance by Lorenzo Totaro, Flavia Rotondi, Chiara Vasarri, and Konrad Krasuski

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE