Courtesy of BZ WBK

Poland's largest bank by assets, PKO Bank Polski, said in a statement on Wednesday that it would issue subordinated bonds worth zł.5 billion. Analysts say these could be used to aid the bank's likely bid for Allied Irish Banks' controlling stake in Bank Zachodni WBK.

“What PKO really wants to do is show Allied Irish that it has the means to fund the transaction,” Michal Sobolewski, analyst at IDMSA brokerage house, told Reuters.

The Treasury strongly encouraged PKO's expected bid throughout late June, as many in the Polish government would like to see a reduction of foreign control in Poland's banking sector. One of the their main arguments is that foreign-controlled Polish banks could suddenly freeze lending if their owners ran into trouble on their home markets.

“We have common European law and we cannot differentiate between the origins of the investor, but on the other hand, the mobilization of Polish capital is important, because it demonstrated that it is more stable,” said Maciej Wiewiór, spokesperson for the Ministry of Treasury. “If the bank [PKO] decides to make such a move [bidding for BZ WBK], then it can count on our support as one of the shareholders,” he added.

PKO itself has long maintained that it would look to acquire other assets with a view to consolidating its position at the top of the Polish banking market.

“We do not exclude any scenario that allows the use of our potential and ensure the position of undisputed leader,” daily Parkiet reported Zbigniew Jagiełło, president of PKO BP, as saying after Wednesday's bond declaration.

Recent media reports have also speculated that a number of foreign financial institutions, including Italy's UniCredit and Intesa SanPaolo, Spain's Santander and France's BNP Paribas, as well as the UK's HSBC, might well make bids for BZ WBK. So far, none have confirmed or denied the rumors.

AIB's stake in BZ WBK is valued at around zł.10 billion at current market prices. (GP and VZ)