Institutional intentions

The future of state-owned insurance colossus PZU has become a hot topic after the firm weathered a turbulent first week of September. The biggest news of the week was the leak of plans to merge PZU and PKO BP, Poland's largest bank.

According to the Rzeczpospolita daily, the Treasury Ministry envisions PKO taking a 100-percent stake in the insurer over two phases. The bank would also assume the burden of claims made by Dutch Eureko, a minority stakeholder in PZU, which is demanding privatization of the insurance firm or compensation of up to R9 (zł.34.3) billion.

Following such a merger, the resulting behemoth would become the largest corporation in Central Europe. The Treasury Ministry, which currently holds 55 percent of PZU and 51.5 percent of PKO, would have a stronger grip on the new entity and, at the same time, receive payment for the shares of PZU transferred to the bank. PKO may find the merger attractive as well, as it faces the prospect of losing its number-one status once the merger of Bank Pekao and Bank BPH is complete.

The new head of PZU was also announced last week, following the dismissal of Jaromir Netzel from the post. Agata Rowińska, previously the deputy chairperson of PZU's supervisory board, was chosen for the post because, according to Treasury Minister Wojciech Jasiński, she could guarantee the firm's continued development.

"My most important goal will be stabilization and continuity," Rowińska said when the news was announced. Commenting on the possibility of a PZU-PKO merger, she said any decision was for their largest shareholder, the Treasury, to make.