August 8, 2018 / 6:05 AM / 4 months ago

Polish banks Pekao, Alior walk away from merger

Aug 8 (Reuters) - Poland’s second-largest lender Bank Pekao and smaller rival Alior Bank have ended talks on their tie-up as they could not agree on the terms, the banks said late on Tuesday.

Last year the banks said they were analysing possibility of cooperation or a merger and in May Pekao’s chief executive said the decision on a possible tie-up should be made by the end of the second quarter.

“(The end of talks) results first from financial terms, which Pekao was not able to fulfill amid phase cycle and global challenges, which we start to see, as well as Alior Bank’s business model”, Pekao’s Chief Financial Officer Tomasz Kubiak told Reuters on Tuesday.

“I can’t disclose any of the details of the talks nor the level (share swap parity). As a management we found that the levels expected by the management of Alior Bank could not have been met. We saw the sense of the merger, but not at all cost”, he added.

Pekao said it remains open to non-organic growth.

“We have an opportunistic approach to mergers. Now we’re not looking around as we ended one process, so it’s not that we immediately start another one”, Kubiak said asked if the bank was interested in taking over Eurobank or Polish branch of Credit Agricole.

Head of Pekao’s second-biggest shareholder the PFR state development fund said in February that if Pekao drops the idea of acquiring Alior, a merger with PKO, Poland’s No.1 commercial bank by assets, would be worth considering.

“For now we’re not considering anything like that. As a bank we are focused on implementing the strategy and we are not considering any merger with a smaller or bigger bank”, Kubiak said.

A Pekao-Alior merger would have underpinned a consolidation trend in Poland’s banking sector, which has accelerated in recent years. (Reporting by Anna Koper in Warsaw, writing by Anna Pruchnicka; Editing by Gopakumar Warrier)

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