WARSAW: Poland’s biggest bank, PKO, denied it might merge with nearest rival Pekao next year, following a report by Rzeczpospolita newspaper that the two were in talks.

“It is not true that PKO BP has participated in talks regarding the possibility of merging PKO with Pekao. PKO is not working on any projects regarding the suggested merger; a merger is not the aim for 2018,” PKO said in a statement. Pekao’s spokeswoman declined to comment.

The government owns 29.4 per cent of PKO, while state-controlled insurer PZU and state-owned investment vehicle PFR together own 32.8 per cent in Pekao.

“If we want to play an important role on the EU’s banking market in the next five to 10 years then merging these two institutions would be a good solution,” Pawel Borys, the head of PFR, was quoted as saying by Rzeczpospolita.

PKO BP and Pekao have 9.4 million and 5.4 million clients respectively, and after the potential merger the banks would have 34 per cent share in the Polish loan and deposits market and a total of 462 billion zlotys ($129.1 billion) of assets, Rzeczpospolita reported.

The combined entity was also likely to be the biggest company listed on the Warsaw bourse, according to the report.

“I have been saying for a long time that in the Polish banking sector there is room for four, five big universal banks. PKO BP will be not only the leader of Polish banking sector but also the leader of its change,” PKO Chief Executive Zbigniew Jagiello was quoted as saying by Rzeczpospolita.

Shares in PKO and Pekao rose by 0.3 per cent and 1.05 per cent respectively at the market opening.

Reuters