December 9, 2016 / 10:42 AM / a year ago

Correction: Fitch: Change in Ownership Neutral to Pekao's IDRs

(The following statement was released by the rating agency) WARSAW/LONDON, December 09 (Fitch) This commentary replaces the version published on 8 December to correct that PFR, and not PZU, will buy a 2.8% stake in Pekao subsequent to its 10% purchase from Unicredit. It also corrects the stakes that PZU and PFR will hold in Pekao after the transaction. Fitch Ratings says the sale of UniCredit S.p.a's 32.8% (UniCredit) stake in Bank Pekao SA (Pekao) to a consortium of PZU SA (PZU) and Polski Fundusz Rozwoju (PFR) is neutral to Pekao's Issuer Default Ratings (IDRs), but is likely to be negative for Pekao's Support Rating. This transaction will also materially increase the market share of state-controlled banks in the system. Pekao's (A-/Stable) IDRs are driven by the bank's intrinsic strength and therefore would not be impacted by the expected change in ownership. However, they would be sensitive to a marked weakening of Pekao's capital position or a significant increase in risk appetite. Following the announcement by UniCredit that it was in talks with PZU SA and the PFR regarding a possible sale, Pekao's Support Rating of '2' was placed on Rating Watch Negative in November 2016. This reflected Fitch's expectation that the new controlling shareholders' ability and propensity to provide extraordinary support, should a sale go through, will be lower than available from UniCredit (for more details see 'Fitch Affirms 4 Leading Polish Banks; Outlook Stable' dated 9 November 2016 at Fitch expects to resolve the Rating Watch upon the completion of the transaction. After the completion of the transaction, Pekao will be 20%-held by PZU and 12.8% by PFR. The remaining 7.3% stake in Pekao held by UniCredit and not covered by the sale and purchase agreement (SPA) will be sold to third party investors through equity-linked certificates that are intended to be settled on or before 15 December 2019. According to the SPA signed between UniCredit, PZU and PFR, once the required regulatory approvals are granted the transaction is going to be concluded in two steps. PZU will buy an SPV to which UniCredit will transfer a 20% stake in Pekao, and PFR will buy a stake of just below 10% in Pekao directly from UniCredit. PFR will subsequently buy a 2.8% stake in Pekao from UniCredit. Apart from Pekao, UniCredit has also agreed to sell its stakes in asset management companies in Poland: mutual fund manager (Pioneer Pekao Investment Management S.A), open pension fund manager (Pekao Pioneer PTE S.A.) and an investment house (Dom Inwestycyjny Xelion sp. z o.o.), thereby completely withdrawing from the Polish market. PZU is the largest Polish insurance company and 32.2% state-owned, with the remaining shares widely held. The company is listed on the Warsaw Stock Exchange. Despite the only minority stake held in the company, the Polish state has effective control over PZU. PFR is a fully state-owned development fund. PZU, together with its subsidiaries, is the largest shareholder in a medium-sized Polish bank Alior (BB/Stable), holding as of July 2016 a 29.2% stake (25.2% of which PZU owns directly). According to public statements by PZU's CEO, there is no plan to merge Pekao with Alior. The market share by total assets of directly and indirectly state-controlled banks in the system will increase upon the completion of the transaction to around 35% from around 25%, and will include the largest bank, PKO BP (29.4% owned by the state), the second-largest, Pekao, two smaller banks (Bank Ochrony Srodowiska, B+/Stable) and Bank Pocztowy, and the state development bank: Bank Gospodarstwa Krajowego (A-/Stable). Contact: Artur Szeski Senior Director +48 22 338 6292 Fitch Polska SA Krolewska 16, Warsaw 00-103 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email:; Malgorzata Socharska, Warsaw, Tel: +48 22 338 62 81, Email: Additional information is available on ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. 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