PKO on route to raise capital

The Polish government is working on raising the capital of Bank PKO BP as means to boost the bank's opportunities for potential takeovers. According to the Treasury Minister Aleksander Grad, the move would increase the bank's potential to lend to small-and medium-sized businesses.

The company will also forgo a 2008 dividend. "I've decided that PKO BP will not pay a dividend from 2008 [profit] to give it additional funds for mergers and acquisitions in the banking sector," Grad told reporters.

Grad added that the new plan is not because PKO is in difficult financial conditions, but rather the plan would allow the company to take advantage of potential takeovers. This comment mirrored previous statements that the company should look for potential foreign takeover targets as the financial crisis has cut its rivals price.

Meanwhile, analysts are skeptical that foregoing this year's dividends is going to do the trick. "The government is trying to force through its plans for PKO BP to lead consolidation in the region," Marek Juras, the head of research at BZ WBK brokerage, told Reuters. "Foregoing this year's dividend will not be enough to buy something large."

PKO's paid zł.1.1 billion of last year's profit as dividend.

Source: Reuters