POLAND – The number of Polish second-pillar funds (OFEs) is set to shrink from 14 to 13.

On 12 February, the Polish Financial Supervision Authority (KNF), the country's pensions regulator, formally approved the takeover of OFE Polsat by PKO BP Bankowy PTE.

Poland's anti-monopoly commission had cleared the deal back in October 2012.

As of the end of January, the 14 funds had a net asset value of PLN268.9bn (€65bn) and close to 16m members.  

The Polsat fund was the smallest, with 300,908 members and a net asset value of PLN2.4bn.

PKO BP Bankowy OFE ranked ninth with 658,227 members and net assets of PLN9.4bn.

The takeover will push PKO BP Bankowy up into seventh place in terms of members and eighth in asset value.

The KNF noted on its website that members of the combined fund would benefit from lower management fees, while existing Polsat fund members would see their contribution fees reduced from 3.5% to 3.4%.

Ewa Małyszko, chief executive at PKO BP Bankowy PTE, told IPE this would be the lowest fee charged in the OFE market.

Liquidation of the Polsat fund starts on 16 April, with all members and assets transferred to the new owner by 19 July.

While there were 21 funds initially licensed in at the start of the second-pillar system in 1999, there has been relatively little consolidation in recent years.

The last merger, between the Aegon and Skarbiec funds, took place in 2008, while four years earlier Polsat itself took over Kredyt Bank's fund.

Since direct acquisitions were banned in 2012, consolidation is one of the two options for smaller funds to increase their size significantly.

The other is the quarterly allocation lottery for new workforce entrants who failed to choose a fund themselves.

While neither option is available to the larger funds, the market remains highly concentrated, with the three biggest OFEs – ING, Aviva and PZU 'Złota Jesień' – accounting for 60% of net asset value and 50% of membership.