November 17, 2017 / 2:53 PM / a month ago

UPDATE 2-BNP Paribas interested in Raiffeisen's Polish business - sources

(Combines stories and adds background)

By Marcin Goclowski and Marcin Goettig

WARSAW/VIENNA, Nov 17 (Reuters) - BNP Paribas has approached Raiffeisen Bank International to express interest in buying the Austrian bank’s Polish division Raiffeisen Bank Polska IPO-RBP.WA, two sources familiar with the situation said.

BNP Paribas’ move follows a string of bank deals in Poland driven by tough competition, low interest rates and efforts by the country’s Law and Justice (PiS) party to curb what it sees as excessive foreign ownership.

Raiffeisen said on Friday it was still planning to float the Polish business or to sell a majority stake in its core banking operations, but said it had received an approach from a potential buyer.

“The French are conducting talks on buying Raiffeisen’s (Polish unit). This is BNP Paribas,” one senior banking source told Reuters. Another source from the Polish financial sector also said BNP Paribas was interested in the Polish subsidiary.

Raiffeisen and BNP Paribas both declined to comment.

Raiffeisen Bank Polska is Poland’s 10th largest lender by assets. BNP Paribas already owns Poland’s 7th biggest lender BGZ BNP Paribas, which it bought in 2014 from Rabobank for 4.5 billion zlotys ($1.39 billion) as part of a plan to expand in faster-growing markets.

The book value of Raiffeisen Bank Polska, including its portfolio of foreign currency loans, stands at 6.4 billion zlotys ($1.78 billion), according to the bank’s most recently published financial statement.

EFFORTS

Raiffeisen has attempted to sell the Polish business before as part of longstanding restructuring plans, but these efforts were unsuccessful.

The Polish bank’s mortgage portfolio, the bulk of which is in Swiss francs, carries political risk and has hindered both a previous attempt to sell the Polish business as well as the planned listing, which was delayed until next year.

Raiffeisen said on Friday it was preparing to carve out the mortgage portfolio and “eventually transfer” it to RBI.

Many Poles took out Swiss franc loans before the global financial crisis to benefit from a strong zloty and low Swiss interest rates. But a subsequent surge in the Swiss franc meant many borrowers were stuck with real estate worth less than the value of the loan. That has become a political hot-button issue.

On Friday, Reuters also reported that Spanish bank Santander has entered exclusive talks to buy the bulk of Deutsche Bank’s business in Poland in a bid to strengthen its position in the highly competitive market. ($1 = 3.5955 zlotys) (Reporting By Marcin Goclowski and Marcin Goettig, Shadia Nasralla, Francois Murphy, and Maya Nikolaeva; editing by Francois Murphy and Jane Merriman)

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