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UPDATE 2-Polbank deal sates Raiffeisen CEE appetite

Published 02/04/2011, 07:11 AM
Updated 02/04/2011, 07:16 AM

* Polbank takeover gives RBI the reach it wants - CEO

* Polbank's retail base makes it "perfect fit" - CEO

* RBI shares rise 1.7 percent, EFG Eurobank shares flat

(Adds quotes and background)

By Michael Shields

VIENNA, Feb 4 (Reuters) - Raiffeisen Bank International's (RBI) planned takeover of Poland's Polbank will secure the platform it needs to capture relatively brisk growth in central and eastern Europe, the Austrian lender said.

"We are improving our strategic positioning in this most important central European market, and we have no further acquisition targets in mind for the time being," Chief Executive Herbert Stepic told a conference call on Friday.

RBI, fighting compatriot Erste Group Bank for the spot as emerging Europe's second-biggest bank behind UniCredit, said on Thursday it would buy a 70 percent stake in Polbank for 490 million euros ($675 million) from Greece's EFG Eurobank Ergasias .

EFG will then swap its remaining 30 percent Polbank stake for 13 percent in the combined Polish entity, which will be Poland's sixth-biggest lender by assets, fourth-biggest for customer loans and eighth-biggest by customer deposits.

"It is Poland in which we are investing," Stepic said, citing "solid growth potential in an underpenetrated market" and saying Polbank's retail strength made it a "perfect fit" for RBI's Polish unit, which focuses on corporate clients.

Unlike the rest of Europe, Poland's economy cruised through the financial crisis without contracting and remains poised to outpace sluggish growth in western Europe.

Spanish banking giant Santander agreed in September to buy a core stake in Polish bank Zachodni for up to 4.17 billion euros.

RBI's Polbank purchase at around 1.7 times book value looks cheap compared with the roughly 2.8 times book that Santander paid, but the Spanish bank bought into a profitable lender, while Polbank lost 26 million euros in the first nine months of 2010.

Most Polish banks trade above 2 times 2010 book value.

NO SHARE SALE NEEDED

RBI said it expected the deal -- set to close late this year or early in 2012 -- to generate savings of around 60 million euros per year from 2013 onwards, representing around 30 percent of Polbank's 2012 cost base.

It estimated integration costs of 90 million euros over 2012 and 2013.

On a pro-forma basis using figures from the end of September 2010, the deal would reduce the group's core Tier 1 capital ratio by 0.6 of a percentage point to 9.1 percent.

But Chief Financial Officer Martin Gruell reiterated RBI saw no need to raise its equity capital any time soon.

"We continue to feel comfortably capitalised," he said.

Stepic said he was open to talks with EFG Eurobank on cooperation elsewhere in eastern Europe if the opportunity arose.

A banking source close to the deal had told Reuters in November that Intesa Sanpaolo SpA, BNP Paribas and Raffeisen were in the hunt for Polbank, with offers between $600 million and $800 million.

Eurobank, Greece's second-largest lender, had announced it was looking for a partner to buy up to a majority stake in its Polish business to strengthen its balance sheet.

RBI shares had gained 1.7 percent to 43.525 euros by 1200 GMT, while EFG Eurobank shares were unchanged.

Hit by the country's debt crisis, Greek banks were shut out of wholesale funding markets after their bond portfolios were damaged by successive sovereign credit rating downgrades, forcing them to rely on the European Central Bank.

The Raiffeisen group merged with unlisted parent RZB in October, adding RZB's domestic corporate business and its wholesale banking unit to Raiffeisen's franchise in 17 countries of the former Communist bloc. (Reporting by Michael Shields; Editing by Erica Billingham and Will Waterman) ($1=.7257 Euro)

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