Spanish bank Santander is set to become a contender for a leading position in the Polish structured product market, following the merger of Bank Zachodni and Kredyt Bank announced last week. Both banks were among the top five most active issuers of structured products in 2011, while Kredyt Bank also acted as a distributor for all products launched within its group, including structured funds launched by KBC Asset Management and Warta Life.
Banco Santander and KBC announced last week that they have entered into an investment agreement to combine their Polish banking subsidiaries, Bank Zachodni WBK and Kredyt Bank. Following the agreement, Santander will hold approximately 76.5% of the new firm and KBC around 16.4%. Other minority investors will hold around 7.1% stake. Santander has committed to help KBC to lower its stake in the new bank to below 10% immediately after the merger. Furthermore, KBC's intention is to divest its remaining stake, with a view to maximising value.
Kredyt Bank and Warta, both part of KBC, had to be sold in order to repay government aid KBC has received. Warta Life was sold to German insurance company Talanx International for €770m only last month.
The existing cooperation between Kredyt Bank and KBC TFI (KBC Asset Management) will remain in place for the foreseeable future. The new bank will distribute KBC TFI's funds under a non-exclusive distribution agreement for a minimum of two years from the completion of the merger.
The transaction is expected to close in the second half of 2012, subject to the registration of the merger between Bank Zachodni WBK and Kredyt Bank, and regulatory approval.
With this move, Santander will increase its market share in Poland, one of its ten core markets, underlining its long-term commitment to the Eastern European country. The proposed merger will consolidate the new bank's position as Poland's third largest bank by all measures, with a market share of 9.6% in deposits, 8.0% in loans and 12.9% in branches (899). With more than 3.5 million retail customers, the new firm will also be Poland's third in terms of revenues and profit, significantly closing the gap to the market leaders.