WARSAW, Oct 2 (Reuters) - PKO, Poland's top bank by assets, wants to use 81 percent of an expected $1.7 billion of net proceeds from a cash call to boost its loan book, the bank said in the issue prospectus published late on Thursday.
The bank plans to spend all the cash from the rights issue by end-2011, it added.
Of the extra cash earmarked for lending, 60 percent will support the retail segment and around 40 percent the corporate segment, the bank said.
The state-controlled bank plans to sell 250 million new shares at 20.5 zlotys each in eastern Europe's first rights issue of that scale. The sale will boost the number of PKO shares in issue by as much as a quarter.
PKO shareholders who bought before Friday will be able to sign up for new shares between Oct 7 and Oct 20, while the rights will be tradeable in Warsaw between Oct 7 and Oct 15.
The lender set a 38-percent discount for the cash call, Warsaw's largest since PKO's own listing in 2004.
Deutsche Bank, Merrill Lynch and UniCredit are warrantors of the issue.
Shares in PKO closed at 33.41 zlotys ahead of the announcement. Their official closing price, taking into account the rights issue price per share, was set at 30.83 zlotys.
PKO joins a growing list of European lenders, including BNP Paribas and UniCredit, tapping the markets via rights issues -- though many western banks are using the fresh cash mainly to repay government bailouts.
Poland has been among a handful of European countries to avoid recession, but some officials have grown concerned that its increasingly conservative banks could stymie its recovery by rationing new loans.
Poland plans to retain its 51-percent stake in PKO by having another state-owned bank buy up its share of the rights.
(Reporting by Adrian Krajewski; editing by John Stonestreet)