Bowing to political pressure and commercial expediency, Unicredito has announced a deal with the Polish government, requiring it to sell 200 outlets of Bank BPH (along-with the brand-name) over a pre-defined but undisclosed timeframe. The process is to be transparent and involve an international auction. In addition, there is to be no job cuts in Bank BPH and Bank Pekao for 2 years. Following the initial deal announcement, we’ve been left with as many questions as answers but, at first glance, it appears that the potential synergy for Bank Pekao shareholders, from a full merger with Bank BPH, has been reduced. We had previously included estimated deal synergy of 10% in our fair value and this could be cut practically in half. For Bank BPH (and Unicredito), there should be some offset from a premium on a sale of branches. However, assuming the branches are sold prior to a merger of the two banks, there is no such offset for Bank Pekao shareholders. As a result, to reflect a more cautious view on the level of synergy (5%), we have cut our fair value estimate from PLN 208 to PLN 198.6 per share. Given limited upside from the current price, we have also cut our rating from Buy to Hold.