Pension funds strike merger deal

If UNFE approves the merger, it will make the fifth-largest pension fund on the market.
By : Leo Broomfield

   Pension funds PTE Dom and PTE Kredyt Bank agreed to merge last week after months of negotiations. The new entity will be called PTE Warta i Kredyt Bank, and the merger is expected to go through by the end of November, according to Marek Jandziński, president of PTE Dom.

   “We have applied to UNFE (Pension Funds’ Supervisory Council), but I think the approval may take at least two months from today,” Jandziński said. He added that the new entity would be looking to increase its client base to up to 300,000 clients from the current 200,000 clients held by the two companies.

   The two sides have been working closely since the start of the year, and at the end of August announced plans to jointly sell both companies’ services. On Aug. 31, PTE Dom applied to UNFE with a preliminary document outlining its business plan and statute for the new pension fund. UNFE has the final authority to approve or reject the planned merger. And according to Sebastian Bojemski, a UNFE spokesman, the council could decide on the case as soon as October.

   If UNFE approves the merger, it will make the fifth-largest pension fund on the market. Previous consolidation in the sector saw UNFE approve the takeovers of Epoka, Pioneer and Rodzina by PTE Pekao. Pension fund OFE Pocztylion and financial investor Arka-Invesco are also in the process of merging.

   Jandziński said the main advantage of taking over Kredyt Bank’s pension fund is the lower costs that will result from one association managing the larger shares.

   Under the merger, 75% of the new fund’s capital will be held by PTE Dom’s current shareholders, financial investor Kulczyk Holding and insurer TUiR Warta. The remaining shares will be held by Kredyt Bank and Nordea Polska TUnŻ (previously Heros-Life). TUiR Warta and Kredyt Bank have the same strategic investor, Belgian financial group KBC Insurance.

   PTE Dom manages shares worth about zł. 204 million ($48.5 million), compared to about zł. 60 million ($14 million) worth of shares managed by PTE Kredyt Bank. PTE Dom is also the larger when comparing clients. It has about 147,000 clients, compared to PTE Kredyt Bank’s 50,000.