Business World

Friday 15 December 2017

First-round bidding on Zachodni closing Monday

Joe Brennan

SUITORS running the rule over Zachodni, Allied Irish Banks' 70.2pc-owned Polish unit, face a busy weekend of number crunching, as the deadline for first-round bids has been set for close of business on Monday.

The Polish Treasury Minister Aleksander Grad confirmed yesterday that state-controlled PKO Bank would submit a non-binding offer next week.

Zachodni has a market capitalisation of 14.2bn zloty (€3.5bn). Analysts estimate AIB could release up to €2.5bn of capital from the sale of its stake, knocking a sizeable dent into the €7.4bn it must generate by the end of the year to reach new regulatory targets.

The Polish minister said his department would ask PKO at its annual general meeting on Friday to hold off on a decision to pay a dividend for this year, in order to boost the bank's firepower to carry out a deal.

A raft of other potential acquirers include French banking giants BNP Paribas and Societe Generale, Italy's Intesa SanPaolo, and Spanish behemoths Santander and BBVA.

Andrei Donskikh, deputy chairman of Russia's largest bank, Sberbank, said the group was "looking at this opportunity". Pekao, the Polish unit of Italian bank Unicredit, has also been linked to the process.

However, sources suggested that the advisers working on the deal, Morgan Stanley and AIB Corporate Finance, were likely to only bring a small number of bidders into a 'data room' on Zachodni's financials following the first round.

The Polish government has made little secret of its wish to keep Zachodni in domestic hands, for fear that in the event of another financial crisis, foreign owners may withdraw funds from the country -- leading to contraction of lending.

Irish Independent

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