* BNP purchase still needs Polish regulator's approval
* Polish banking sector offers stronger growth
* Acquisition target is Poland's No.11 bank by assets
* Rabobank selling assets to improve capital position
* BGZ shares jump by up to 8 pct
(Adds BNP adviser comments, updates shares)
By Marcin Goclowski and Adrian Krajewski
WARSAW, Dec 5 BNP Paribas has agreed
to buy the Polish business of its Dutch rival Rabobank
for $1.4 billion, as the French bank returns to the acquisition
trail after a period of re-structuring and seeks growth outside
the euro zone.
But the deal to buy Rabobank's BGZ unit, Poland's
No.11 bank in terms of assets, needs approval from Poland's
banking regulator KNF, which has previously signalled it is
sceptical about further consolidation in the sector.
KNF said on Thursday it would look into why Rabobank was
selling its Polish unit. "We will be verifying the reasons why
Rabobank decided to change its strategy for its presence on the
Polish market," it said in a statement.
BNP adviser Jean Lemierre told Reuters the bank had already
started talks with the regulator. "We're confident it will not
take long," he said.
Poland's banking sector is undergoing a period of change as
some European banks, still tackling problems from the financial
crisis, sell Polish businesses to boost their capital positions.
Rabobank had said in June it was looking at options for BGZ
given the expected consolidation in Poland's financial sector, a
trend which implied it would have to make acquisitions to avoid
being squeezed by increasingly powerful rivals.
The Dutch lender, which lost its triple-A credit rating from
Standard & Poor's in 2011, is focusing on its banking business
and sold off fund management and private banking units to raise
funds and shore up capital. It has also been hit by a $1 billion
fine for its part in the Libor interest-rate rigging scandal.
Rabobank made no comment beyond saying it wanted a partner
for BGZ. "It was very important for Rabobank to find a
respectable partner who can further develop Bank BGZ's
ambitions," said Rabobank executive board member Berry Marttin.
By contrast, some stronger banks are looking to add assets
in Poland, a market of 38 million people whose economy has
outperformed the euro zone during the crisis. Poland's gross
domestic product growth accelerated to 1.9 percent in the third
quarter from 0.8 percent in the previous three months.
The Polish bank sector's appeal is enhanced by its banks
having escaped the bad debt problems still dogging many of their
western European counterparts.
BNP's proposed acquisition of BGZ, whose shares jumped by up
to 8 percent on the deal, is its latest attempt to buy a chunk
of the Polish market after it lost out to Spain's Banco
Santander in a bidding war for Bank Zachodni.
The deal values BGZ at 1.2 times net assets, a discount to
the average 2.0 ratio among other Polish banks. BGZ's return on
equity, a standard efficiency measure for lenders, stands at 5.2
percent, or less than half the market average.
LOOKING TO EXPAND
Rabobank had not officially put its Polish unit up for sale,
though market sources had told Reuters buyers were being sought.
Besides BNP, Italy's UniCredit and Santander
had also expressed interest in the unit.
BNP, which would buy 98.5 percent of BGZ, has said it is
looking to expand into faster-growing markets and buying BGZ
could yield benefits from integrating it with the group's
existing Polish business.
The companies did not give a price per share for the deal
but the total offered amount implies BNP would be paying 82.5
zlotys per BGZ share, or around 13 percent more than Rabobank
paid last year when it bought a stake from the state.
BGZ shares were last traded at around 76.70 zlotys, a 7
percent discount to the value of the offer and implying some
concerns it may not go through.
The deal is BNP's first cross-border acquisition since its
2008 takeover of Benelux crisis victim Fortis. The French bank
has beefed up its balance-sheet and restructured since then.
BNP adviser Lemierre, former head of the European Bank for
Reconstruction and Development (EBRD), sees promise in Poland.
"As EBRD chairman I've been investing here for 15 years," he
said. "It's an example of well used EU funds. The strength is in
economic growth and job creation and we believe this will
continue in Poland. We see this as a strong banking market."
Bankers and analysts say BNP is now the most robust French
bank and is able to make more acquisitions. It has the largest
capital cushion of the three main French lenders, measured under
tough new global capital rules, and analysts at Morgan Stanley
expect the bank to hike its dividend in the next few years.
BNP had a core Tier 1 ratio of 10.8 percent at the end of
the third quarter, compared with 9.9 percent at SocGen and 10.5
percent at Credit Agricole.
But analysts also say it is unlikely to buy a major European
bank, instead focusing on medium-scale deals like BGZ.
"The acquisition of Bank BGZ constitutes a major step
towards attaining a critical size in Poland," BNP Paribas CEO
Jean-Laurent Bonnafe said in a statement.
Kamil Stolarski, an analyst with Espirito Santo, said the
acquisition would still only give BNP Paribas 4.3 percent of the
Polish market by assets. "As it is still not a significant share
I would expect them to try to buy more banks," he said.
In another recent deal, Poland's top lender PKO
bought the Polish units of Sweden's Nordea for 694
million euros ($941 million) in June.
($1 = 3.0976 Polish zlotys)
($1 = 0.7377 euros)
(Additional reporting by Lionel Laurent and Matthias Blamont in
Paris, with Sara Webb in Amsterdam and Carmel Crimmins in
Dublin; Writing by Christian Lowe; Editing by David Holmes and