Tim Gosling in Prague -

Poland's financial sector regulator KNF announced on May 4 that Talanx is to list on the Warsaw Stock Exchange (WSE). Although the German insurance group declined to confirm that claim, KNF is clearly making approval of the company's acquisition of Warta to become Poland's second largest insurer dependent on the listing.

"Talanx has already declared its debut on the Warsaw Stock Exchange," said Andrzej Jakubiak, head of KNF, according to Dziennik Gazeta Prawna. "In the nearest future we will consider its bid to take over TU Europa and, later, regarding the takeover of Warta."

In tandem with Japan's Meiji Yasuda Life, Talanx agreed to buy Warta from Belgium's struggling KBC Group in February, after signing off on a deal to buy 100% in Europa in December. However, the pair needs KNF approval to complete the deal. A Talanx spokesman refused to comment on whether it would list in Warsaw, reports Reuters. "We are in very good talks with the Polish supervisory authorities about the takeover of Europa and Warta and we expect a decision soon," the spokesman said.

Given the size of the acquisitions, a listing on the Warsaw Stock Exchange is unlikely to disturb Talanx too much. Analysts expect the company to make a long-delayed IPO in Germany in the summer anyway to help raise the cash to complete the purchases, despite the fact that Frankfurt hasn't seen a flotation for months due to the crisis. The temptation of launching a challenge to Poland's top insurer PZU, which recently denied reports that it is in talks to buy out ING's local insurance unit, is enough to help Talanx take that punt it seems.

Standard contract

The push for foreign investors is to help the WSE achieve its ambition to become CEE's top bourse and appears to be one of several conditions that the Polish regulator is making standard for purchasers of major assets in Poland. An agreement struck with Italian banking giant UniCredit Group when it took over the country's second largest bank Pekao, which included maintaining a free float of 25% in the target company, avoiding mass layoffs for two years, and shedding some assets, appears to be the blueprint.

In March, just after Spanish giant Santander agreed with KBC to take over Kredyt Bank and merge it with Bank Zachodni WBK to create Poland's third largest lender, KNF issued a statement saying: "Due to the size of the bank after this potential merger, we will use the functioning of the UniCredit Group, the majority shareholder of Bank Pekao SA, as a benchmark for evaluating the transaction and investment commitments."

"We want the mother company of the combined bank, that is Santander, to be listed on the Warsaw bourse, just as is the case with UniCredit and Pekao," Jakubiak added.

KNF has also been extremely active recently in demanding Polish banks - especially those owned by Western European groups which are struggling to meet the EU's new capital ratio limits - should limit dividends. UniCredit and KNF have traded some (polite) barbs at one another over the issue, which is clearly intended to prevent parents channeling cash out of local units via payouts, which remains a worry across CEE.

However, unlike in many markets in the region, Poland's macro economic growth and banking sector opportunity offers KNF significant sway. Pekao announced in late April that it would pay out just below the 50% limit demanded by the regulator for 2011, a significant drop below its usual range of 70-80%.