PZU insurer will be more advantaged on the merger with PKO BP bank

Prime Minister Jaroslaw Kaczynski gave no details concerning the merger: how it would be made, how is he going to convince Eureko, PZU investor in clash with the Polish government.
“A big consolidation of PKO BP and PZU is being planned. A vital center of Polish force in the economic life will be founded”, Jaroslaw Kaczynski said.
Analysts point out numerous problems and big risk. In their opinion, the bank will be more advantaged than the insurer.
 
No wonder, the bank welcomed Prime Minister’s statement.
“We have always said that we liked the idea of merging with PZU. We are analyzing how the merger would be conducted. Prime Minister’s words mean only that we have to work over the merger quicker then we thought”, Rafal Juszczak, PKO BP CEO said.
He added that in view of consolidations among European financial groups, the merger with PZU may turn out to be a must. The insurer on the other hand is cautious with comments.
“This is a decision of the company’s owner which we are not commenting”, Tomasz Brzezinski, PZU spokesman said.
 
Dutch Eureko, the second main owner of PZU, does not like the idea of the merger. The company reminds that it is actually closer to becoming PZU owner.
“Until there is no decision on the clash over PZU, any discussion concerning capital changes in the company, is premature. You must bear in mind that the state lost the first stage of arbitrary proceeding and two court cases in Belgium. In fall, the second stage of the proceeding will be held”, Michal Nastula, Eureko Polska CEO said.
 
 “The merger would be a big success. Generally speaking, it’s a superb idea. I’m for”, Marcin Jablczynski, CAIB analyst said.
However, the merger will not necessarily be successful.
“Merger of these two companies is a giant event. It would be hard to find a similar example in the history of the Polish market. The bigger the scale, the bigger the risk. You cannot be sure that the merger will end well”, Marta Jezewska, DI BRE analyst believed.
“The newly founded entity would be stronger financially but not as far as its market position is concerned”, Marcin Broda, insurance market expert said.
 
The new company would be financial giant in this part of Europe.
“I can see big synergies, especially as savings are concerned”, Marcin Materna from Millennium DM brokerage said.
“The potential is hidden in making use of the effect of the scale. Synergies are also possible in making use of client bases”, Marta Jezewska added.
Marcin Broda sees some dangers, however.
“Banks make money on bancassurance which is dynamically growing. They make money because they may choose from among competing insurers. They chose the best offers. PKO BP won’t have any choice after the merger”, Marcin Broda pointed out.
The bank won’t become a vital channel selling insurance polices.
Analysts believe that the companies could look for synergy effects even without the merger.
“The state is the owner of both companies so there are no obstacles for them to cooperate. It is possible as the example of Kredyt Bank and Warta shows. The companies have one owner, they cooperate but they are not financially connected”, Marta Jezewska stressed.