Don't bank on it

The merger of UniCredito's Pekao with HVB's BPH would create Eastern Europe's biggest financial group with combined assets of more than zł.120 billion and a market value of zł.48 billion.

UniCredito asked banking regulators to give their seal of approval to the deal in August.

However, in the run up to Poland's general election in September, Law and Justice (PiS) had called on the regulator to halt the deal, something that the banking supervisory commission denies. If the merger is blocked it would set a historical precedent in Poland.

Some analysts believe that PiS is blocking the deal in order to extract concessions from UniCredito. If the deal were to take place it would cost jobs and demote the state-owned PKO Bank Polski to second place in the Polish market.

By making life difficult for UniCredito the government may hope to extract concessions, such as the creation of a Central European management center in Poland or the scaling down of the necessary layoffs.

In a merger situation regulators are only authorized to check whether the subject of the merger's security and growth are threatened, how the deal is financed and the buyer's country of origin. Analysts believe that the law is on UniCredito's side.

"There are no legal grounds for supervisors to block this merger unless they want to unleash a legal war with the foreign investor," said Piotr Palenik, an analyst at ING Securities. "UniCredito seems determined to go ahead with the merger, and if problems are made, they could go and fight in court."

Marek Juras, the head of research at Bank Zachodni WBK, is not troubled by the delay: "The merger will take place sooner or later. Looking at past bank mergers in Poland, it took several months for the supervisor to grant permission, so UniCredito will have to show patience."

Poland is the only EU country not to have approved the merger. (Reuters)