In Poland, the merger between European banking giants UCI and HVB is certain to trigger more significant changes than anywhere else, as UCI is a strategic investor in Bank Pekao SA, while HVB is the core shareholder of Bank BPH, the country's second- and third-biggest lenders respectively. The merger would create Poland's largest bank, which in terms of assets would easily outpace the current leader, state-controlled PKO BP. The Italians have been looking for the green light for the merger from the Commission for Banking Supervision since July last year, but so far to no avail.
Birth of a banking giant
Between them, Bank Pekao SA and BPH have 1,327 outlets and 25,000 employees, 6,000 of which could lose their jobs as a result of the link-up, according to analysts' estimates. Law and Justice (PiS), the ruling party, openly opposes the merger saying that it would lead to an oligopoly in the Polish banking sector.
"A real giant will come into existence and it will limit free competition. Even now the Polish banking sector is not diverse enough," said Wojciech Jasiński (PiS), the head of the parliamentary finance committee.
According to government reports, the new institution would gain a 23-percent share of the deposits market, 22 percent of the loan market and 42 percent of the investment fund market. Thus, the two biggest banks in Poland - the merged Pekao SA/BPH and PKO BP - would control some 50-60 percent of the market in each segment. The report also forecasts that the merged banks would increase the price of their services and later transfer the revenues abroad.
Marek Jura, a banking sector analyst in BZ WBK, casts doubt on these claims. "When talking about consolidation in this sector one has to refer to the CR-5 indicator showing the five largest institutions' share in total bank assets. Poland occupies 15th or 16th position among European countries when it comes to CR-5. After the merger, it would move some two positions up, so talking about the monopolization of the Polish sector is an exaggeration," he says. He added that as a result of the merger the costs of loans could only drop.
Prime Minister Kazimierz Marcinkiewicz, however, is determined to block the operation. He declared this during PiS' electoral campaign and is sticking to his promise. However, since the Office of Competition and Consumer Protection (UOKiK) expressed no objections to the merger, the only way for Marcinkiewicz to keep the merger from happening is through the Commission for Banking Supervision (KNB). The bank regulator must decide whether UCI can exercise voting rights attached to BPH's shares. The government has already decided that the answer should be 'no'.
Contractual complications
According to the Treasury Ministry, the 1999 agreement under which the Italian lender bought Pekao SA bars it from buying another large Polish bank. During a radio interview, Andrzej Mikosz, Treasury Minister at the time, clearly stated that he wanted UCI to sell its shares in BPH within one month. An official letter to Alessandro Profumo, CEO of UCI, and a ministerial communiqué followed.
"UCI never obtained the consent of the Treasury Ministry as a party to the Pekao SA privatization agreement to purchase BPH shares. Moreover, it never even submitted a relevant query," reads the communiqué.
Under Polish law, bank regulators can check only whether a takeover target's security and growth are threatened, how the deal is financed, and the buyer's country of origin. But Paweł Pelc, who is deputy head of the securities commission and holds a seat on the bank regulatory committee that will vote on the merger, said: "Pacta sund servanda [contracts must be observed] is one of the basic rules in business as far as I am aware. The Treasury Ministry asked UCI to cease breaching an agreement stipulating that they would not, directly or indirectly, buy shares in competing entities. The Commission for Banking Supervision will surely take this factor into account when making its final decision."
Ministerial mess
A meeting between the Treasury Minister's and UCI's representatives was scheduled for last week, but just before it was to take place Mikosz tendered his resignation after he was accused of corruption. Daily Rzeczpospolita reported that Mikosz's wife granted a loan to the mother of an investor accused of illegally manipulating stock prices.
When asked about a possible link between the accusations in the press and the Pekao/BPH merger, Mikosz said: "I can't say for sure that the merger lobby had anything to do with the article. I don't really know whether there is a cause-effect relationship. However, the sequence of events as well as the timing [of the accusations] is rather striking."
For the time being, there is a vacancy at the helm of the Treasury Ministry. Prime Minister Marcinkiewicz has said he already knows the name of the Minister-to-be, but that he requires some more time before revealing it. Among Mikosz's possible successors, the press and politicians mention Wojciech Jasiński, Civic Platform's (PO) Senator Dariusz Jacek Bachalski, and the Commissioner of Warsaw Mirosław Kochalski, a trusted deputy of President Lech Kaczyński while he was still the Mayor of Warsaw.
Analysts expressed the hope that after Mikosz's resignation, the government's stance on the acquisition of Bank BPH by Unicredito Italiano would mellow. However, Wojciech Jasiński dismissed such speculations: "PiS is strongly against the merger and I don't think the Prime Minister will let go."
PiS hard to please
Analysts, however, still mostly view Poland's reluctance towards the merger as a bargaining chip in its talks with UniCredito, rather than as a full-blown attempt to derail the tie-up.
Some press reports state that the Italians have agreed to decrease the number of layoffs in the new bank to 2,000 or 3,000, and spread them over a longer period of time. They are also allegedly planning to open an IT center in the city of Łód. Moreover, Poland's position in the international corporation would become much stronger, with the merged Pekao/BPH supervising the operations of Ukrainian and Balkan subsidiaries and answering directly to the Milan headquarters instead of being part of a CEE holding.
The KNB is expected to make its final decision early this year and a lot depends on the three PiS representatives on the seven-member regulatory body. The government promises to use all possible arguments in order to hinder the merger in the Polish market.
However, increasing globalization means international mergers are likely to become more and more common and even the most obstinate government will not be able to stop them all.
The resignation of Andrzej Mikosz could be the first of many job losses as a result of the controversial Unicredito-HVB banking merger. But with PiS strongly against the move, and three of its deputies firmly entrenched on the Commission for Banking Supervision (KNB), the merger has yet to fully come to life.
Źródło:
