According to an official announcement, BRE Bank will not appeal the negative decision of the Insurance and Pension Funds Supervisory Commission on the merger of the PTE Skarbiec with PTE PZU. According to the statement, BRE Bank will continue to seek opportunities to exit the pension fund business.
Our view: It’s not surprising that BRE Bank will continue to try to sell the pension fund business, as the bank has planned to divest it from the beginning of 2005. However, the information that BRE Bank will not appeal from the regulators decision could be a negative surprise. It seems the only way to exit the business is to find another buyer that is not already present on the Polish pension fund market. In our opinion, this may be quite difficult, given the operations lack of scale, with just 2.7% market share in assets in 1H06. We reiterate our Sell rating on the stock.