By Marcin Goclowski and Adrian Krajewski
WARSAW (Reuters) - BNP Paribas has agreed to buy the Polish business of its Dutch rival Rabobank for $1.4 billion (856.3 million pounds), as the French bank returns to the acquisition trail after a period of re-structuring and seeks growth outside the eurozone.
But the deal to buy Rabobank's BGZ unit, Poland's No.11 bank in terms of assets, needs approval from Poland's banking regulator KNF, which has previously signalled it is sceptical about further consolidation in the sector.
KNF said on Thursday it would look into why Rabobank was selling its Polish unit. "We will be verifying the reasons why Rabobank decided to change its strategy for its presence on the Polish market," it said in a statement.
The deal values BGZ at 1.2 times net assets, a discount to the average 2.0 ratio among other Polish banks. BGZ's return on equity, a standard efficiency measure for lenders, stands at 5.2 percent, or less than half the market average.
Poland's banking sector is undergoing a period of change as some European banks, still saddled with problems from the financial crisis, sell Polish businesses to boost their overall capital positions.
Rabobank had said in June it was looking at strategic options for BGZ given the expected consolidation in Poland's financial sector, a trend which implied it would have to itself make acquisitions to avoid being squeezed by increasingly powerful rivals.
Rabobank, which lost its triple-A credit rating from Standard & Poor's in 2011, is focusing on its core banking business and sold off its fund management and private banking units in order to raise funds and shore up capital.
It has also lately been hit by a $1 billion fine for its part in the Libor interest-rate rigging scandal.
The Dutch bank made no comment beyond saying it was a priority to find a partner for BGZ.
"It was very important for Rabobank to find a respectable partner who can further develop Bank BGZ's ambitions," said Berry Marttin, a member of Rabobank's executive board.
By contrast, some stronger banks are looking to add assets in Poland, a market of 38 million people whose economy has outperformed the euro zone during the crisis. Poland's gross domestic product growth accelerated to 1.9 percent in the third quarter from 0.8 percent in the previous three months.
The Polish bank sector's appeal is enhanced by its banks having escaped the bad debt problems still dogging many of their western European counterparts.
BNP's proposed acquisition of BGZ, whose shares jumped 8 percent on the deal, is its second attempt to buy an increased chunk of the Polish market after it lost out to Spain's Banco Santander in a bidding war for Bank Zachodni .
LOOKING TO EXPAND
Rabobank had not officially put its Polish unit up for sale, though market sources had told Reuters buyers were being sought. Besides BNP, Italy's UniCredit and Santander had also expressed interest in the unit.
BNP, which would buy 98.5 percent of BGZ, has said it is looking to expand into faster-growing markets and buying BGZ could yield benefits from integrating it with the group's existing Polish business .
The companies did not give a price per share for the deal but the total offered amount implies BNP would be paying 82.5 zlotys per BGZ share, or around 13 percent more than Rabobank paid last year when it bought a stake from the state.
BGZ shares were changing hands at around 76.80 zlotys by 1104 GMT, a near 7 percent discount to the value of the offer and implying some concerns it may not go through.
The deal is BNP Paribas' first cross-border acquisition since its 2008 takeover of Benelux crisis victim Fortis. The French bank has beefed up its balance-sheet strength since then and restructured itself.
Bankers and analysts say BNP is now the most robust of the French banks and is able to make more acquisitions. It has the largest capital cushion of the three main French lenders, measured under tough new global capital rules, and analysts at Morgan Stanley expect the bank to hike its dividend in the next few years.
BNP had a core Tier 1 ratio of 10.8 percent at the end of the third quarter, compared with 9.9 percent at SocGen and 10.5 percent at Credit Agricole.
But analysts also say it is unlikely to make a significant purchase of a leading European bank, instead focusing on medium-scale "bolt on" acquisitions, and the deal for BGZ was in line with that pattern.
"The acquisition of Bank BGZ constitutes a major step towards attaining a critical size in Poland," BNP Paribas CEO Jean-Laurent Bonnafe said in a statement.
Kamil Stolarski, an analyst with Espirito Santo, said the acquisition would still only give BNP Paribas 4.3 percent of the Polish market by assets. "As it is still not a significant share I would expect them to try to buy more banks," he said.
In another recent deal, Poland's top lender PKO bought the Polish units of Sweden's Nordea for 694 million euros ($941 million) in June.
(Additional reporting by Lionel Laurent and Matthias Blamont in Paris, with Sara Webb in Amsterdam and Carmel Crimmins in Dublin; Writing by Christian Lowe; Editing by David Holmes)