POLAND – The Polish treasury has finally settled its lengthy dispute with pan-European financial group Eureko by giving it the go-ahead to purchase a further 21% stake in the privatised Polish insurance group PZU, which covers 60% of the domestic market….

The move would give Eureko a controlling stake in one of the country’s largest open pension funds Zlote Jesien, run by PZU subsidiary PTE PZU.

The long-running dispute had become a major source of embarrassment in Poland and cast a black cloud over international investment into the country.
In a statement, Poland’s treasury minister Aldona Kamela-Sowinska announced that Eureko, which together with Gdansk based bank BIG BG currently owns 30% of PZU, can buy a majority share in the company at a price to be set in an official IPO.

Eureko bought the initial stake in 1999 for a price of Zlty3bn (e837m)

A source working close to the deal commented: “ We’re glad it’s over, because it would have created a terrible image for Poland as far as foreign investors go.
“ I was speaking to one insurance company recently that was thinking about investing in Poland and they had decided not to do so for the time being.
“One of the reasons was that they were not happy with what was happening in the Eureko/PZU affair.”

Both the government and the company say they hope the IPO will take place on the Warsaw Stock Exchange by the end of the year.

The move follows 14 months of dispute between the Polish government and Eureko. Following the announcement the two parties have agreed over a new supervisory board and have withdrawn all law suits from the proceedings.

As the current majority owner, the ministry of the state treasury, named three members of the new PZU supervisory board, including the president, while Eureko named two of its members.
The supervisory board will be chaired by Jerzy Sablik – a mutual choice - and includes João Talone, the chief executive of Eureko, and Boguslaw Kott, the president of BIG Bank.
Zygmunt Kostkiewicz was appointed as president of the new management board.

PZU comprises the property insurance company PZU, the life insurer PZU Zycie, pension society PTE PZU and the fund manager TFI PZU.

The Eureko group was created in November 2000 through a combination of the insurance and banking arms of Dutch group Achmea and Seguros & Pensiones, the insurance interests of Portugal’s Banco Comercial Portugues.
The group also includes Friends First of Ireland and Foreign & Colonial in the UK.