Poland's MPs amend law to allow UniCredit merger

Poland's lower house of parliament on Wednesday approved legislation to allow Italian bank UniCredit to go ahead with the planned merger of its two Polish lenders.

The changes to banking law, which have been criticised by the central bank and the opposition, still need to be approved by the Senate and signed by the president to come into force.

Poland's condition was that UniCredit split up BPH and sell nearly half of its branches and the brand before the tie-up. This required changes in the banking law, which the government promised to implement by Oct. 19. The current regulations do not allow banks to be broken up.

Analysts have said that, due to political turmoil in Poland, the changes to the legislation may be delayed, forcing the Polish government to ask UniCredit to renegotiate the April compromise agreement to gain more time.

Poland's Senate meets on Wednesday and Thursday.

The Polish central bank has criticised the changes that would allow spin-offs of local lenders, saying they could threaten the industry's stability and weaken its supervision.

"The changes might have a deep negative impact on the state budget, pose risk of uncontrollable changes in the banking system and ... in extreme cases might threaten its stability," Deputy Central Bank Governor Jerzy Pruski told legislators.

The main opposition party, the pro-business Civic Platform, argued that after the changes foreign banks could easily move the headquarters of Polish banks abroad and escape local supervision.

But analysts said the new regulations were unlikely to spark transfers of bank assets. Besides that, local regulators will be able to block any bank spin-off if it threatens stability.

"I would not expect any major moves just after the new law comes into force, because it simply doesn't make sense to leave Poland, where for example the corporate tax rate is relatively low," said Dariusz Gorski, an analyst at Deutsche Bank Securities.

Source:today.reuters.com