At yesterdays press conference, which was called to summarize the government achievements during last year, Jaroslaw Kaczynski, Polish Prime Minister, has stated that the government is planning consolidation of PKO BP and PZU (national insurance company).
The concept was keenly welcomed by Rafal Juszczak, the recently appointed CEO of PKO BP, already in June, however it seems that the bank was surprised as well, as it presented lately the idea of creating its own insurance company. On the other hand, Michal Nastula, the CEO of Eureko Poland (Dutch Eureko is the second biggest shareholder of PZU with a stake of 33%, minus one share) has stated that the discussion, concerning changes in the shareholding structure, would be premature at this stage of disagreement with Polish government.
Our view:
It appears that the government strategy concerning PZU is constantly changing. First speculations regarding the concept of creating such financial holding, in order to resolve a long-term conflict with Eureko over PZU, have occurred in October 2006. However in January 2007, Polish State Treasury Minister, Wojciech Jasinski, had claimed that the State Treasury is not working on the consolidation of the two financial institutions. Lately, the national insurer had presented two-option strategy of its further growth. The first option was to forge a capital link with Bank PKO BP, which, given the strength of its retail distribution network, would be the most advantageous approach. Alternatively, PZU was considering to build its own bank. Meanwhile, the ownership of PZU is in dispute, after an arbitration court ruled last year that Poland violated an international treaty by breaking a promise to sell 21% of it to Dutch Eureko. Poland has appealed the ruling.
We believe the news should have a neutral impact on the stock trading today, given the constant changes in the strategy and the very low visibility of potential consolidation.