UniCredit Nears Sale of Partial Stake in Poland's Bank Pekao

Italy's UniCredit SpA has agreed on key parameters to sell the bulk of its controlling interest in one of Poland's largest banks to state-controlled Polish insurer PZU SA for nearly $3 billion, people familiar with the matter said Friday.

Under the proposed transaction, PZU would pay about 11 billion zlotys ($2.8 billion) for about 30% in Bank Pekao SA, the people said.

UniCredit, which has been eager to raise cash and bolster capital levels in recent months, would keep an interest of about 10% in Pekao, they said.

A UniCredit spokeswoman and PZU declined to comment. Bank Pekao didn't respond to requests for comment.

If completed, the transaction would mark a further step in the electoral pledge Poland's conservative government has made to regain control over the country's banking industry. With about 60% of the sector's assets in foreign hands, the government has long complained that mostly resilient Polish banks are unnecessarily exposed to bouts of market turmoil and an occasional credit crunch in the heavily indebted eurozone.

The Pekao takeover by PZU, in which Poland holds a 34.2% stake, would reduce foreign ownership of the banking sector well below 50%.

UniCredit's management is looking to carry out asset sales before unveiling a strategic plan on Dec. 13. Proceeds from the sale are expected to lift the Italian lender's share price, a welcome boost ahead of a hefty cash call which is likely to be the corner stone of UniCredit's plan.

By the same token, shedding assets will also allow UniCredit to raise a smaller proportion of the capital it needs to shore up its financial position by issuing new shares.

At the end of the second quarter, UniCredit's common equity Tier 1 ratio–a measure of the bank's capital solidity—stood at 10.51%, very close to regulatory requirements of 10% and lower than the 12.7% boasted by Italian rival Intesa Sanpaolo SpA.

Write to Martin M. Sobczyk at [e-mail] and Giovanni Legorano at [e-mail]

(END) Dow Jones Newswires

October 14, 2016 15:05 ET (19:05 GMT)

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