February 6, 2018 / 2:44 PM / 6 months ago

Pekao should consider supermerger with PKO if Alior takeover fails -shareholder

WARSAW, Feb 6 (Reuters) - A key shareholder of Polish bank Pekao said the state-run lender should consider a supermerger with PKO BP if it does not go ahead with its plan to take over Alior Bank.

Poland’s two biggest banks Pekao and PKO in December denied a report in the Rzeczpospolita daily that they may pursue a merger. But Pawel Borys, a key ally of Polish Prime Minister Mateusz Morawiecki and the head of state investment vehicle PFR, which has a 12.8 percent stake in Pekao, is keen to keep the idea of a supermerger with PKO on the table. He has opposed Pekao’s takeover of Alior.

“As far as the Pekao/PKO merger is concerned it is a theoretical discussion. But it is worth discussing it,” Borys, who is a former managing director of PKO, told Reuters on Tuesday.

A merged Pekao/PKO would be big enough to compete with rivals outside Poland amid expected consolidation in Europe’s banking sector, he said.

“There is an example of a merger between Santander and Bradesco in Spain,” he said. “After it Santander started its successful international expansion. The question is do we want a Polish bank to take part in consolidation on the European market.”

Pekao and Alior said in October that they were considering merging and Pekao is due to release an analysis on a potential takeover by the end of March.

“When deciding about the merger with Alior, we’re taking a decision regarding whether the merger with PKO may go ahead,” Borys said. “If the decision is to merge Pekao with Alior, it closes the way to a merger with PKO. If not, then one can decide in favour of a PKO/Pekao merger or not.”

Borys stressed that he would decide on whether to finally support a Alior/Pekao merger only after reading Pekao’s analysis.

INVESTMENTS

Borys said his PFR fund, created to support huge infrastructure investments, will spend 7 billion-8 billion zloty ($2 bln-$2.4 bln) this year on affordable housing for Poles, as well as on development of the country’s venture capital and private equity markets and investments by local governments.

He said PFR’s net profit rose last year to almost 200 million zloty, from around 30 million a year earlier, in large part thanks to a hefty dividend from Pekao, while its return on equity jumped to 13 percent from 2 percent a year earlier.

“Our investment in Pekao is of a long-term character. We want this bank to conduct a stable dividend policy,” he said. Pekao has said it is able to allocate 100 percent of its profits for dividends. ($1 = 3.3716 zlotys) (Writing by Marcin Goclowski; Editing by Susan Fenton)

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