The politics of the Polish banking system
Currently there is a battle in Poland between Italy ' s UniCredito and the Polish government concerning the takeover by Italy ' s UniCredito of the Polish Bank BPH. UniCredito would merge Bank Pekao with BGH and create Eastern Europe's largest financial group.
The Polish government is saying that this takeover is a violation of the privatisation agreement under which UniCredito was able to purchase shares in bank Pekao. The term in the privatisation agreement that the Polish government says is being violated is the term that restricted UniCredito from engaging bank Pekao in competitive activities. The government is now interpreting this provision to mean that it does not allow UniCredito to merge bank Pekao with Bank BPH.
Speculation this that the government is playing a game of hardball in order to force UniCredito to make some concessions that will be beneficial to the Polish government. These concessions are speculated to be perhaps the creation of a Central European Management Center in Poland, the reduction in number of layoffs that will be necessary after the merger, or some cash compensation to offset the losses due to reduced privatization income that is expected to come to the Polish government.
Currently the Polish government is engaged in talks with the management of UniCredito concerning the merger. Many feel the Polish government is insincere in negotiations in that the three week negotiation period agreed to buy the bank is little more than a period during which the Polish government to can continue to press UniCredito for concessions.
It appears that in UniCredito is determined to go forward with the merger and it is expected, by some, that the merger process will end up in court.
The Polish government is using many tactics in its attempt to pressure UniCredito. It is also applying pressure to those who must approve the merger.
The board of the National Bank of Poland must rule favorably for the merger to go forward. The Polish government has said that unless the board of the independent National Bank of Poland allows for a government representative to go to the board meeting, it will refer the matter to the public prosecutor. Some claim that this is simply blackmail.
The dispute over the bank merger has currently taken second place to the dispute over early elections in Poland. The election debate should be over within the next couple days and the bank merger is likely to come to the forefront of the Polish news again.
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