PZAKY Powszechny Zaklad Ubezpieczen SA (PK)

By Martin M. Sobczyk

WARSAW--Polish insurer PZU SA (PZU.WA) said on Wednesday it plans to build a banking group that would be in the top five by assets in Poland, part of the nation's drive to reassert greater control over its economy.

PZU said it views the project, which began in 2015 with the acquisition of a relatively small bank called Alior Bank SA, as an investment, which it may exit in a few years when it can take a profit.

The strategy of building a bank capable of competing in the foreign-dominated Polish banking sector is in line with a policy put forward by Poland's socially conservative government, the company's largest and controlling shareholder.

The government said in June it was encouraging the large companies it controls, including PZU, to consider acquiring some of the banks that eurozone owners are looking to sell in Poland. Polish officials have said they want to cut the share of banking assets held by foreign owners from about 60% at present.

PZU said that by 2020 its banking operations would hold at least 140 billion zlotys ($36.5 billion) in assets, compared to some 40 billion zlotys at present.

The company, which is Central Europe's largest insurer, is in talks with Italy's UniCredit SpA (UCG.MI) about a possible takeover of Bank Pekao SA, in which UniCredit holds 40%, people familiar with the talks said on Tuesday. Pekao is Poland's second-largest bank by assets.

PZU Chief Executive Michal Krupinski said on state radio this week that the company is in talks about buying several other banks but didn't give details. On Wednesday, he attempted to duck questions from reporters about his nearest travel arrangements and reports that he's going to Milan to talk with Unicredit.

Asked about it repeatedly, he eventually said: "What trips? I don't comment on media speculation."

Mr. Krupinski, a former Bank of America Merrill Lynch banker appointed in January in the first months of Poland's current government, said "it's a buyer's market" for banks in Poland and that acquisitions of banks are the best way for PZU to use its excess cash.

PZU also said on Wednesday it plans to look for potential takeover targets in the insurance sector outside Poland. It already owns insurance businesses in Lithuania, Latvia, Estonia and Ukraine.

Write to Martin M. Sobczyk at martin.sobczyk@wsj.com

(END) Dow Jones Newswires

August 24, 2016 11:10 ET (15:10 GMT)

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