Poland Focuses on Buying UniCredit Unit Before Raiffeisen’sBy and
Takeover of Pekao is the government’s priority, minister says
Deadline for final bids for Raiffeisen unit passed on Tuesday
The Polish government’s drive to boost domestic ownership of banks is focused on taking over UniCredit SpA’s unit, a minister said on Tuesday. The deal may be structured in a way that avoids triggering a mandatory bid for a majority in Bank Pekao SA, according to people familiar with the plans.
On a day when binding bids for Raiffeisen Bank International AG’s Polish unit were due, Treasury Minister Dawid Jackiewicz told reporters that the “priority” for the government and state-run companies is to gain control of Bank Pekao SA from UniCredit. At the center of that effort is insurer PZU SA, whose executives traveled to Milan to discuss a potential Pekao deal last month. The company is also likely to bid for the Austrian bank’s unit, Puls Biznesu newspaper reported last week.
UniCredit and Raiffeisen are both considering the disposal of their subsidiaries to boost capital ratios, playing into the hands of the Polish government which wants more say in the economy and seeks to end what it called “the exploitation of Poles” by mostly foreign-owned lenders. Pekao’s 170 billion zloty ($44 billion) in assets, three times the size of Raiffeisen Bank Polska, make it the top prize in the consolidation wave, with the buyer gaining a platform for further expansion, according to Dariusz Gorski, an analyst at Bank Zachodni WBK SA.
“Pekao appears much more important and attractive for government-controlled companies,” Gorski said on Tuesday. “With excess capital and cash, it could help provide the funds for its potential new owner to take over Raiffeisen’s unit.”
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 50 percent. The Hungarian cabinet has already met a similar target set by Prime Minister Viktor Orban.
"We support increasing Polish ownership of banks and buying Pekao would do just that, that’s why this is our priority,” Jackiewicz said on the sidelines of an economic conference in Krynica, Poland. While he declined to comment on Raiffeisen’s sale, he said that “PZU is key for the process of re-Polonization.”
PZU’s Chief Executive Officer Michal Krupinski declined to comment on potential bids for Raiffeisen or Pekao on Tuesday, while a Vienna-based spokeswoman declined to elaborate on details of the bidding process for Raiffeisen Bank Polska on Wednesday.
PZU and state development fund Polski Fundusz Rozwoju SA want to buy less than UniCredit’s 40-percent stake in Pekao, according to two people with knowledge of the plans, who asked not to be named because the talks are private. The insurer, which picked Deutsche Bank AG to advise it for the talks, wants to avoid triggering a mandatory bid for a 66 percent stake in Pekao, which would occur if its stake topped 33 percent.
Both companies are looking to complete the Pekao deal by November, the people said. PZU’s and UniCredit’s press offices declined to comment, as did Polski Fundusz Rozwoju spokeswoman Agata Nalecz.
Raiffeisen’s CEO Karl Sevelda last month said his bank has received “interesting” non-binding offers for the unit, which has a book value of 1.4 billion euros ($1.6 billion), but that he won’t sell at “any price,” especially as its capital position is improving. Nevertheless, the Austrian bank must find a buyer by the end of September and seal the deal this year or be forced to float it on the Warsaw bourse, according to an agreement with the Polish banking regulator in May.
UniCredit, whose stake in Pekao was worth 13.5 billion zloty at Tuesday’s closing price, may tap shareholders for as much as 5 billion euros or sell assets to raise capital. It can’t sell more Pekao shares before Oct. 11 after a disposal earlier this year. The stock fell 0.9 percent to 126.40 zloty by 2:57 p.m. in Warsaw, extending its decline this year to 12 percent.