July 8, 2016 / 1:30 PM / 3 years ago

France's BNP joins race for Raiffeisen Polish arm: sources

WARSAW (Reuters) - BNP Paribas (BNPP.PA), France’s largest listed bank, joined Polish state-run lenders PKO BP (PKO.WA), Alior (ALRR.WA) and Dutch ING ING.AS in the race for Raiffeisen’s (RBIV.VI) Polish business, three sources said.

Workers are suspended as they assemble letters of the Raiffeisen Polbank's bank logo on their new building in Warsaw, Poland October 29, 2015. REUTERS/Kacper Pempel/File Photo

Austria’s Raiffeisen Bank International (RBI) has said it aims to sell its Polish unit Raiffeisen Polbank IPO-RBP.WA, the country’s 10th lender by assets, to a rival listed in Poland.

BNP Paribas, which already owns Poland’s seventh largest lender by assets, Bank BGZ BGZ.WA, declined to comment on the issue. Raiffeisen also had no comment.

“The list is getting a bit longer with BNP joining in,” one of the sources said, while two other people with knowledge of the matter confirmed that BNP was interested.

Polbank may fetch 0.8 billion-1.0 billion euros ($881 million-$1.1 billion) when stripped of its problematic Swiss franc-denominated mortgage portfolio.

RBI intends to sell Polbank as part of a restructuring plan aimed at shrinking its balance sheet and bolstering its core capital ratio.

A newly imposed Polish bank tax and low interest rates have made business more difficult for smaller banks in the country. At the same time Poland’s conservative government wants state-run banks to raise their market share through takeovers.

Earlier this month, sources told Reuters that ING’s Polish unit ING Bank Slaski (INGP.WA), Poland’s largest bank PKO and their smaller rival Alior, controlled by Polish state-run insurer PZU (PZU.WA), were in the running for Polbank.

“Polish banks’ foreign owners now face a choice between either leaving Poland or growing their subsidiaries’ scale to make all the costs bearable and maintain the business’ profitability,” one of the sources said.

Poland’s banking sector is now 60 percent owned by foreign lenders such as Santander (SAN.MC), Commerzbank (CBKG.DE), or UniCredit (CRDI.MI). UniCredit, owner of Poland’s second biggest bank Pekao (PEO.WA), is also reviewing its holdings, a source told Reuters earlier this year.

Reporting in WARSAW by Pawel Sobczak, Adrian Krajewski, and Marcin Goclowski. Additional reporting by Maya Nikolaeva in PARIS and Shadia Nasralla in VIENNA; Editing by Keith Weir

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