Warsaw point

8 December 2016 By Dominic Elliott

The Italian lender will sell a third of Bank Pekao to two Polish state-controlled entities. UniCredit needs capital, may share the upside via a sale of equity-linked paper, and Warsaw’s hatred of foreign capital is a spur. Still, at 1.4 times book it’s cheap versus some peers.

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Italy's UniCredit on Dec. 8 agreed to sell a 32.8 percent stake in Warsaw-based Bank Pekao to two Polish state entities, insurer PZU and development fund PFR, for 10.6 billion zloty ($2.6 billion).

The Italian lender said that its common equity Tier 1 capital as a proportion of its risk-weighted assets would rise 55 basis points as a result of the transaction, which is expected to be completed around mid-2017.

The Italian lender will also offload its remaining 7.3 percent stake in Pekao by selling equity-linked certificates on the market, which UniCredit said would initially be priced at around 500 million euros ($540 million), with a potential maximum settlement price at a premium of between 15 percent and 17 percent.

UniCredit said PZU and PFR's stake purchase price was equivalent to a price to book value multiple of 1.4 times its reported net assets as of the end of September.

In addition, UniCredit will transfer shareholdings in a number of Polish companies to PZU and PFR for an aggregate consideration of 634 million zloty.

By 0948 GMT, shares in UniCredit were broadly flat on the previous day at 2.49 euros, shares in Pekao were down 1 percent at 119.60 zloty and shares in PZU were up 1.4 percent at 31.85 zloty.

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