France’s Societe Generale has sold its EuroBank business in Poland to Bank Millennium for 1.83 billion zlotys ($484 million), further reducing its exposure to eastern Europe.
The deal ties in with plans by Millennium’s Portuguese owner BCP to find new areas of growth and indicates the trend toward consolidation in the fragmented Polish banking sector.
SocGen, one of the lowest-scoring banks in the latest European stress tests, is shedding assets to focus on its core businesses. It announced a deal in August to sell its banks in Bulgaria and Albania to Hungary’s OTP Bank OTPB.BU.
The Polish sale will lead to a 2 billion euro ($2.3 billion) reduction in SocGen’s risk-weighted assets and boost its tier-one capital ratio by 8 basis points.
Analysts at brokerage Jefferies wrote that the EBA’s stress test was of limited impact for SocGen and other French banks, since “the capital positions have improved materially since the last test.”
Despite its low ranking, SocGen nevertheless passed the threshold set by the European Banking Authority (EBA) in the latest health check on the sector.
Analysts at Keefe, Bruyette & Woods (KBW) also said the deal was a good one for parent company BCP.
“At first glance we believe this transaction will be well received,” wrote KBW, which kept an “outperform” rating on the shares of Portugal’s BCP.