News: French banking company BNP Paribas has expressed interest in acquiring the Polish arm of the Dutch banking company Rabobank, according to Reuters. The acquisition of Bank BGZ could be worth US$1.4bn, and the Italian bank UniCredit has already submitted a preliminary offer. Rabobank has not officially put the unit up for sale, and it is merely reviewing its options. The company is reportedly looking to raise funds after the US and EU regulatory authorities fined it US$1bn as a result of the Libor rate-fixing scandal.
BMI View: We believe Emerging Europe will see no return to record low borrowing costs for the foreseeable future, and the impact on growth and profitability for regional banks will be net negative. Varying levels of FX exposure and non-traditional loan financing mean some sectors will be harder hit than others, with Hungarian and Croatian banks most at risk. Nevertheless, since we have long anticipated higher borrowing costs, recent developments have not prompted any notable downgrade to our banking sector growth forecasts or a broader outlook for regional banks. On the contrary, the recent selloff in stock prices has pushed valuations for some banks back to more attractive levels.