Polish bank to bid for AIB’s stake

THE state-backed Polish bank PKO BP will place an offer to buy AIB’s 70% stake in Bank Zachodni WBK (BZ WBK) next week, ahead of the end of June deadline.

A top analyst at BNP Paribas warned that the deal could result in a loss of domestic funding as the authorities sell the zloty to pay for the deal in euro.

In that context the deal could represent a “substantial negative factor” for the Polish zloty warned BNP’s emerging- market strategists Shahin Vallee who is London based.

“The Polish banking system would find it even more difficult than right now to expand credit action as the transaction would remove a lot of earnings that could be retained as additional capital,” the analyst said.

AIB is selling its 70% in the bank as part of an asset sell-off across the globe to raise €7.4bn in fresh capital.

BZ WBK is Poland’s third-biggest bank by market value.

The deal will part satisfy the Financial Regulator’s stiffer demands regarding capital funding at the Irish banks which have been imposed in recent months.

The money has to be raised by end 2010 to prevent AIB becoming majority owned by the Irish state.

The Polish government supports PKO’s bid to buy the shares, its Treasury Minister Aleksander Grad has said.

The stake is worth about 10 billion zloty (€2.5bn), based on the current market value of the bank.

PKO is Poland’s largest lender by assets with over 10 billion zloty in its coffers built up from earnings retained over the past two years and a share sale which is more than enough to fund the proposed deal.

The government said that it would support PKO in a move that came ahead of an expected bidding war between major European players such as the Spanish bank Santander, French bank BNP Paribas and Italian bank UniCredit.

Asked why he believed the country’s top lender would be capable of financing the purchase on its own, Minister Grad said.

“It is not a belief, it is certainty. On June 28, PKO BP will present its offer for buying a stake in BZ WBK,” he added.

Poland wants to keep the bank in domestic hands because officials fear if another financial crisis struck, foreign owners could withdraw funds from their Polish units or could bring lending to a halt.