Race for Commerzbank’s polish unit attracts foreign interest
October 16 2019 10:04 PM
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Customers enter an MBank branch, operated by Commerzbank, in Warsaw, Poland. BNP Paribas Bank Polska may be interested in an acquisition of MBank, daily Rzeczpospolita reported yesterday, a day after it broke news that Poland’s fifth-biggest lender, ING Bank Slaski, has set up a special team that will analyse a potential transaction.

Bloomberg/ Warsaw

Poland’s state-controlled lenders, long seen as the favourites in a race for Commerzbank AG’s unit in the country, may be about to face competition from their foreign-owned rivals.
BNP Paribas Bank Polska SA may be interested in an acquisition of MBank SA, daily Rzeczpospolita reported yesterday, a day after it broke news that Poland’s fifth-biggest lender, ING Bank Slaski SA, has set up a special team that will analyse a potential transaction.
ING and MBank jointly have around 300bn zloty ($77bn) in assets, second only to government-controlled PKO Bank Polski SA.
PKO and state-run Bank Pekao SA are seen as key players in the government’s efforts to boost its sway over the economy.
The ruling Law & Justice party has used state-owned companies to buy lenders and utilities from foreign investors in the name of “economic patriotism.” So far no bank has openly expressed interest in MBank, but the lender with an award-winning mobile app and exposure to Poland’s robust middle class may be too good to pass up.
“MBank seems to be the best target for lenders of similar size because it would allow for the biggest synergies,” Bank Millennium SA analyst Marcin Materna said by phone. “For ING Slaski, but also for BNP Paribas and Pekao, or even Bank Handlowy, it will be an important to analyse a potential bid.”
Commerzbank, advised by Goldman Sachs Group Inc, has decided to sell the Polish subsidiary to cover the costs of cutting 4,300 jobs and buying out the stake the lender doesn’t yet own in online unit Comdirect Bank AG.
BNP Paribas Polska, ING Slaski and its owner ING Groep NV declined to comment on MBank.
Commerzbank’s 69% stake in MBank, a lender that has posted a net profit of more than 1bn zloty in each of the last eight years, is valued at 11.2bn zloty.
The stock rose 21% since the German owner announced the sale plan on September 20, including 4.9% so far this week to trade at a three-month high.
“We expect the MBank deal to be a crowded call,” Kamil Stolarski, an analyst at Santander Bank Polska SA, wrote in a note, adding that the investment case for minority investors “seems to depend mostly” on the structure of the transaction.
Commerzbank chief financial officer Stephan Engels told investors last month that ING Bank Slaski, with price-to-book ratio of 1.7-1.8, would be “most appropriate” peer valuation for MBank, which is trading roughly in line with its book value.
The profitability of the lenders differs in part because of MBank’s 16.5bn zloty portfolio of foreign-currency mortgages.
Growing legal risks over such mortgages, which may force banks to boost provisions, could be carved out by Commerzbank before any transaction, potentially sweetening the deal. The vauations of banks will hefty portfolios of non-zloty loans, including MBank, have suffered in past months.



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