Poland vowed today to support the bid it expects from by state-controlled lender PKO BP for Allied Irish Banks' Polish unit.
A long list of banks, including Spain's Santander, France's BNP Paribas and Italy's UniCredit, are expected to make non-binding bids for Allied Irish's 70 per cent in BZ WBK by the deadline at the end of June, if only to get a peek at the books of one of Poland's top banks.
However, Poland's regulators and other officials said the government could use the opportunity to reduce foreign participation in Poland's banking sector, which analysts say could translate into tougher conditions for a sale to a foreign buyer.
"I would like to state clearly that it's not trivial for Poland who will buy this bank (BZ WBK) and how it is done," treasury minister Aleksander Grad told a news conference on Tuesday. "PKO will be strongly supported by us in this process."
He also said the ministry, which controls 51 per cent of PKO, would suspend the bank's annual meeting this week to decide whether to divert the funds for a proposed 1 billion zloty ($347.3 million) dividend to a war chest.
To finance the purchase of BZ WBK, which has a market capitalisation of $4.4 billion, PKO would likely still have to raise further 5 to 6 billion zlotys -- its second cash call in less than a year -- to pay for the stake valued at $3.1 billion.
Investors are hoping that a bidding war for BZ WBK will ensure an attractive price for them as the winner will have to buy other 30 percent in the Polish lender.
Under Polish law, an investor who surpasses 66 per cent ownership in a listed company must bid for the rest.
PKO and BZ WBK shares were both near flat in trading by 11am Irish time today, while Warsaw's main WIG20 index had slipped 0.9 per cent.
BZ WBK shares had risen as much as 12 per cent since Allied Irish, under pressure from the Irish Government, said it would sell foreign assets, including its crown jewel BZ WBK.
But in June, amid rising talk of a favoured domestic buyer, the stock shed nearly 4 per cent, a touch more than Warsaw's banking index.
The bank still trades at 2.6 times its 2009 book value compared to a regional median of 1.7, according to Erste Group.