- Title: POLAND: Compromise deal struck on Polish banks.
- Date: 6th April 2006
- Summary: CLOSE OF BANK NOTES BEING COUNTED IN MACHINE
- Embargoed: 21st April 2006 13:00
- Location: Poland
- Country: Poland
- Topics: International Relations,Economic News
- Reuters ID: LVA3R8JQIDKO70KUL20JD1UJNPZM
- Story Text: Poland and foreign investor UniCredito struck a compromise on Wednesday (April 5) to defuse a row over the Italian bank's expansion, which has hurt the country's image and sparked legal action by the European Union.
The deal allows UniCredito to complete the Polish part of its pan-European takeover of Germany's HVB, but forces the Italians to sell the Bank BPH brand name of the former HVB unit and about 40 percent of the new unit's branches.
UniCredito is seeking to merge its unit Pekao with BPH -- the country's second- and third-largest banks, respectively -- to create post-communist central Europe's largest lender.
The face-saving deal, which includes two-year job guarantees for UniCredito employees in Poland, follows weeks of talks aimed at limiting the fallout from the government's defiant stance over the merger, which has been approved by the European Union.
"We have reached a compromise that is good for all parties," said Polish prime minister Kazimeirz Marcinkiewicz, after the two sides signed the deal.
"It is profitable for the second largest bank in Poland, soon to be the largest Polish bank," he added.
The ruling conservatives' increasingly nationalist rhetoric and repeated attacks on the autonomy of the central bank and the bank regulator have in recent weeks sparked blunt criticism from EU officials, who urged Poland to respect "European values".
Marcinkiewicz played down the impact of the row, described by a leading business lobby group as a "stab in the back" for foreign investors.
The prime minister, branded an "economic nationalist" by Brussels, said he would continue his dialogue with the EU over how much say national governments have in approving mergers.
The European Commission's competition spokesman Jonathan Todd said in Brussels the Commission awaited the details of the deal, adding it would not necessarily end the proceedings by the antitrust division of the EU executive against Poland.
Analysts said the scope of UniCredito's concessions appeared limited, especially since Pekao and BPH had overlapping networks and the Italians had already planned to sell some of their branches.
Pekao shares gained 1.6 percent to 195 zlotys, a touch below their record highs, while BPH lost 1.9 percent to 786 zlotys. Warsaw's WIG 20 index was up 0.3 percent at 1150 GMT.
Marcinkiewicz and his party believe Poland has sold too many of its banks to foreigners and at one point threatened to renationalise Pekao, but he conceded the government would have no influence over who buys the BPH spin-off.
The deal comes ahead of Wednesday's meeting by the Banking Supervision Commission, which is due to decide whether to allow UniCredito to exercise voting rights from a 71 percent stake in Bank BPH that once belonged to HVB.
The regulator's approval is necessary for UniCredito to take control of the bank. The government has argued that by buying BPH, UniCredito breached a 1999 agreement under which it bought Pekao and pledged not to buy another bank in Poland.
Brussels said the deal was not valid after Poland joined the EU in 2004 and accepted the block's single-market rules.
- Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2014. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None