* PZU seeking to buy Austrian and U.S.-owned local banks
* Foreign banks have controlled sector since privatisations
* Government wants to "re-polonise" banking
* State lenders could end up with 25 pct of banking assets
By Adrian Krajewski
WARSAW, June 8 (Reuters) - Polish state-controlled insurer PZU is buying up banking assets with the government's blessing under a plan to create a major home-grown bank that can challenge the local businesses of major foreign lenders.
PZU has said its acquisitions are purely commercial but they also fit in with the centre-right government's desire to "re-polonise" banking in a market where units of lenders such as Santander of Spain,, Unicredit of Italy, and Germany's Commerzbank have long held a majority share.
The insurer has already announced it is buying a 25 percent stake in Polish mid-tier Alior Bank, while financial sector sources have told Reuters it also wants to add Austrian-owned Raiffeisen Polbank and BPH, the local unit of the U.S. group GE, both of which are for sale.
If all these deals go ahead, PZU would control banks with combined assets of 130 billion zlotys ($35 billion), putting it not far behind Santander's BZ WBK which is Poland's third-biggest lender by assets.
"Then we'd have a big bank which competitors should fear," said Hanna Kedziora, an analyst at the Trigon DM brokerage.
The bank that emerges from PZU's buying spree will be led by Wojciech Sobieraj, who launched Alior two months after the 2008 collapse of Lehman Brothers set off the financial crisis, and built it up by poaching clients from established rivals.
Sobieraj, 48, grew up in a poor town near the Ukrainian border, and early in his career worked as a Wall Street broker. In the strait-laced world of banking he used to stand out with his shaggy collar-length hair, although he changed to a more conventional style two years ago.
He is a friend of PZU's chief executive Andrzej Klesyk, according to someone who knows the banker.
Poland's biggest lender by assets is state-controlled PKO BP . However, local institutions remain collectively outgunned by rivals bought up by foreign banks in the privatisations that followed the fall of communism.
Since the 2008 debt crisis, some struggling western European banks have relied heavily on cash generated by their Polish units. Any change in the Polish market that threatens this flow would cause a headache for the parent companies.
PZU has a cash pile of up to 9 billion zlotys earmarked for possible takeovers. Analysts say its prospects for growth in the insurance market, where it is the dominant player, are limited, prompting it to look to banking. "We're in talks to buy two other banks. We expect at least one more such agreement before the end of the year," Klesyk told reporters.
The deals that, according to the sources, PZU wants to pull off, would create a bank with around 4 million clients and 1,700 branches. It would aim to build on Alior bank's success in winning customers through innovative Internet banking and Raiffeisen Polbank's strong position in leasing and factoring.
If such a bank is achieved, state-controlled firms would control a quarter of the banking sector's assets when PKO BP is taken into account.
Calls to favour home-grown banks are likely to grow louder as the opposition Law and Justice, a conservative party which favours intervention in the economy, is leading in opinion polls before parliamentary elections in October.
The ruling Civic Platform, which is trailing in third place, has taken up the cause. "After years of importing capital and know-how from foreign banks it's time to re-polonise the financial sector," treasury minister Wlodzimierz Karpinski said in a statement after PZU announced it would buy the Alior stake.
Some bankers have said Poland is heading in the direction of Hungary where a populist government has imposed tough levies on lenders, forcing some foreign owners to sell out at a discount. However, sellers of the Polish assets are not currently under any such pressure and will be seeking a fair market price. ($1 = 3.6853 zlotys) (Additional reporting by Marcin Goclowski; Writing by Adrian Krajewski; editing by David Stamp)