Sell up or ship out

The Polish government brought out the big guns in the protracted conflict over the merger of Pekao and Bank BPH. Last Thursday, in a letter to Unicredit, the Treasury Ministry extended the deadline for Unicredit to sell its shares in BPH by a further three months, warning that if the Italians fail to comply, it will annul their 1999 acquisition of Pekao SA.

"The Ministry calls for the restoration of the situation consistent with the agreement by means of the sale of all shares in BPH SA ... within three months under penalty of withdrawal from the privatization agreement," the letter reads.

The government claims that by acquiring BPH, the Italian bank broke Pekao's privatization agreement, in which Unicredit pledged not to buy another bank in Poland as long as it holds a 10 percent stake in Pekao. The Ministry also accuses the Italians of violating Bank BPH's privatization deal, in which HVB Group AG pledged to guarantee BPH's continued operations under its name and trademarks.

The government claims that a merger of Pekao SA and Bank BPH will harm competition by creating a banking oligopoly and lead to job cuts. Unicredit's takeover has been approved by the European Commission and all other EU countries except for Poland.