Shedding the brand to close the deal

A conclusion to the Pekao-BPH merger controversy was again put off for another week.

A day after the Financial Times wrote that a possible solution to the row could see Unicredit selling off its BPH brand along with a number of branches, the State Treasury and Unicredit officials resumed negotiations. Three days later, the Italians asked to move the negotiations to April 3, claiming that they wanted to get acquainted with the proposal offered by the government.

Although few details of the government's proposal were revealed, Treasury Minister Wojciech Jasiński confirmed last Wednesday that selling some of the branches was indeed a part of the proposed resolution.

Analysts say the plan would allow the Polish government to save face while still allowing the merger to go through. Selling the BPH brand would ensure it didn't disappear from the market, as required by the bank's privatization agreement. The Italians would benefit as well. By selling branches, the Italians could reduce the number of people laid off and would lower the costs of the merger.

A final decision could come this week. Poland was supposed to submit a letter to the European Commission explaining its opposition to the merger, the largest in European banking history, by April 3.

On April 5, the Banking Supervision Commission (KNB) is to decide on Unicredit's voting rights within BPH. The government wants to reach an agreement with the Italians before the KNB session takes place. "I hope that the agreement will be ready before April 5," Jasiński said.