French bank Societe Generale is exploring a sale of its Polish unit Eurobank, which is facing rising pressure from competitors, two investment bankers in Warsaw said.
Poland's banking market is highly competitive as historically low interest rates have squeezed lenders' margins, and smaller players are struggling to compete with big banks and deliver satisfactory returns for shareholders.
Eurobank is the 17th largest Polish bank with assets of 14 billion zloty ($3.9 billion), and is more than 20 times smaller than the country's biggest lender PKO BP. Last year, it made a net profit of 103 million zloty.
"Eurobank is in a sale process. SocGen is withdrawing (from retail banking activities) in Poland," one of the bankers said, while another banker confirmed that Eurobank is for sale. Neither wished to be identified as talks are private.
"(SocGen's) strategy is to gain 1st to 3rd place in every market. Since it hasn't happened here, they are to withdraw," the first source said. "The question is who will buy Eurobank, as buyers such as BNP and Santander recently bought smaller banks."
The sale of Eurobank would underpin a broader trend of consolidation in Poland's banking sector, which has accelerated in recent years with the ruling eurosceptic Law and Justice (PiS) party encouraging domestic ownership.
Societe Generale has said that it would dispose or close sub-scale entities that bring low synergies. "Societe Generale doesn't comment on market rumours," a spokesman for France's third-largest bank said about a potential sale of Eurobank.
SocGen has strong market shares in the Czech Republic and Romania, where it has also based its back office.
The bank has a 1.1 percent market share in Poland when taking into account its stock of customer loans, according to a presentation to investors.
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