WARSAW, Nov 5 (Reuters) - Poland’s Bank Millennium , fresh from a $484 million deal, expects further consolidation in Eastern Europe’s biggest banking sector as low interest rates and consumers’ changing habits add to pressure on banks.
Millennium, majority owned by Portugal’s BCP, agreed on Monday to buy Euro Bank, the Polish business of France’s Societe Generale, for 1.83 billion zloty ($484 million), strengthening its position in the biggest former communist EU member.
“Its true that it (consolidation) has accelerated in the recent past. We still think that it is not the end and something will happen in 2-3 years,” Millennium Chief Financial Officer Fernando Bicho told a news conference.
“We’re living in an environment of low rates which puts pressure on banks, we’re seeing a change in consumer behaviours which requires investments in digital ... and this also puts pressure on a cost side, so scale is more and more important.”
Millennium is the seventh largest bank in Poland, while Euro Bank ranked 17th in what remains a highly fragmented sector.
However, the industry is relatively healthy as banks are supported by economic growth in Poland and not saddled with a hangover from the financial crisis.
The Millennium deal reinforces a broader trend of consolidation which has accelerated in recent years with the ruling eurosceptic Law and Justice (PiS) party seeking to encourage domestic ownership.
Last year Poland’s government, which says that the country is too dependent on foreign investors who bought into Polish assets in the 1990s and 2000s, snapped up a third of the country’s second biggest lender Bank Pekao.
In September state-run Alior Bank expressed an interest in Euro Bank, but later failed to buy it.
PKO BP, Poland’s biggest lender, emerged as the most resilient bank in the recent tests conducted by the European Banking Authority (EBA), while another Polish lender Bank Pekao ranked third, the two banks said. (Reporting by Marcin Goclowski Editing by Keith Weir)