Talk gets tough

Poland may face action from the European Commission for trying to prevent an international bank deal because of its concerns about Polish subsidiaries. "We've asked the services ... to look at possible infringement proceedings," said EU Commissioner Charlie McCreevy. "I'm not satisfied with the reply from the Polish authorities."

The deal involves Italian bank Unicredito's takeover of Germany's HVB, which formed Unicredit. In Poland this should have meant Unicredito-owned Pekao would be merged with HVB's Polish subsidiary, BPH. However, Poland's government is trying to block Unicredit's plans, claiming the merger would affect competition and cause job losses.

"We are not violating European Union law," said Treasury spokesman Marcin Mazurek. "Right now we are waiting for the decision by the EU tribunal."

McCreevy wrote to the Polish government expressing concern that its efforts to prevent the deal could be viewed as interfering with the free movement of capital across EU countries, a violation of EU treaties.

The Polish government has accused the Commission of misjudging the impact the bank deal will have on the Polish market, and argues that the agreement signed by Unicredito when it bought Pekao in the late 1990s precludes it from taking over any other Polish banks. (Reuters)