PKO Bank Polski takes over assets from the Nordic financial group Nordea Bank AB in Poland

The 2013 – 2015 strategy of PKO Bank Polski (announced in April 2013) assumes growth through selected acquisitions. The transaction will contribute to strengthen the PKO’s position as the leading bank in Poland and Central and Eastern Europe. It offers significant revenue and cost synergies potential and increases value for shareholders. As a result of acquisition the estimated increase of the scale of operations will reach 16%, earnings per share 10%, return on investment 13%.

- We declared our will to be active in the M&A market in Poland, due to lowered potential for organic growth. Companies from Nordea group represent the best business fit to the bank. The transaction will strengthen our market position, particularly in the segment of affluent clients and corporate banking. It will also complement our present distribution network with high-service- quality branches in the major agglomerations in Poland and positively influence the development of bancassurance, leasing and factoring products. The amalgamation represents the potential to offer the best practices by combing capabilities of the separate entities, as well as create strong european, financial brand. We can learn a lot from each other – says Zbigniew Jagiełło, CEO of PKO Bank Polski.

Through the acquisition, PKO Bank Polski will reinforce its leadership position in retail and strengthen its corporate franchise. The Bank’s sales network will grow by 25% in the biggest cities, with the majority of branches in attractive locations. The affluent clients segment will raise by 8%.

The acquisition of Nordea Polska TUnŻ will accelerate the achievement of the strategic objectives in the area of bancassurance, which are also included in PKO’s new strategy.

The transaction will also strengthen PKO’s position in the corporate banking segment, particularly in the areas of municipal and corporate bonds issuing, international services including clearing and providing service for key local companies. PKO and Nordea Bank AB are discussing future cooperation in area of providing international service for clients of both institutions.

PKO will also take over and consolidate within its capital group the Nordea Finance Polska, a company offering operational and financial leasing as well as factoring for corporate clients.

Nordea Bank AB agreed to provide funding support for mortgages portfolio denominated in foreign currencies worth 15,2 billion zł. for 7 years. Nordea Bank AB for 4 years will also cover 50% of cost of risk on mortgages loan portfolio over annual level of 40bps.

A part of mortgage portfolio will then be transferred to the newly created mortgage bank, which will enable the development of specialized banking in accordance with regulatory trends, including the Basel III requirements. Mortgage Bank’s headquarters will be located in Gdynia, where currently Nordea Bank Polska’s main office is situated.

The acquisition will stabilize the banking sector. The share of Polish capital in the domestic sector’s assets will raise by ca. 3 pp to more than 40%, limiting its reliance on foreign funding. Its ability to credit domestic companies and households will increase. At the same time, the strong capital position of PKO Bank Polski will preserve high capital adequacy ratios in enlarged organization, at the level required by regulatory authorities. As a result the deal should have positive impact on the polish banking sector’s level of security.

PKO will finance the transaction with cash, including retained profits, and will keep stable policy for dividend payment.

Nordea Bank Polska will be acquired through a public tender offer on the Warsaw Stock Exchange (Nordea Bank AB currently owns 99,21 percent of Nordea Bank Polska), life insurance and leasing business through a private transaction.

According to the schedule acquisition is expected to be finalized at the turn of 2013/2014. The legal merger of PKO and Nordea Bank Polska should occur in about seven months. Re-branding will take place no later than six months from closing.