* UniCredit agrees to sell 32.8 pct stake in lender Pekao
* Italy's biggest bank gets 2.54 bln euros for Polish assets
* Polish state boosts control over economy via biggest banks
* UniCredit completes Pekao equity-linked placement deal
(Adds UniCredit Pekao equity-linked instrument deal)
By Marcin Goclowski and Agnieszka Flak
WARSAW/MILAN, Dec 8 Italy's biggest lender
UniCredit has agreed to sell its Polish assets for 2.5
billion euros ($2.7 billion), improving its financial standing
ahead of share issue at a time of political instability at home.
State-controlled Polish insurer PZU and development
fund PFR agreed to buy a 32.8 percent stake in Pekao
from UniCredit for 10.6 billion zlotys ($2.6 billion).
Pekao, Poland's second biggest lender, will also pay 142
million euros for UniCredit's stakes in other Polish companies.
The sales should give UniCredit a boost ahead of a strategic
review next week that is expected to include a 13 billion euro
share issue, despite political uncertainty at home following the
resignation of Italian Prime Minister Matteo Renzi.
The sale of the Polish assets had been widely flagged and
should not materially change the size of the capital increase as
the bank wants to strengthen its balance sheet once and for all.
Shares in UniCredit, Italy's only systemically important
bank, rose more than 6 percent, bolstered by the Polish sales
and the European Central Bank's decision to extend a bond buying
programme. Pekao shares climbed almost 3 percent.
Analysts said, however, that UniCredit needed to strike a
balance between improving its core capital, which lags several
large European rivals, while maintaining earnings.
Benjie Creelan-Sandford, an analyst at Jefferies, said the
Pekao sale had lifted UniCredit's proforma core capital ratio to
11.78 percent but would knock 6-7 percent off future profits.
"It's another tick in the box ahead of the full strategic
update on the Dec. 13," he said, adding that he expected
UniCredit to announce a clean up of non-performing loans that
would more than offset the loss of earnings from asset sales.
UniCredit, which was advised on the deal by UBS and Morgan
Stanley, has already sold a 30 percent stake in online division
FinecoBank and is in exclusive talks with France's
Amundi to sell its asset manager Pioneer.
The Italian bank is selling its remaining 7.3 percent stake
in Pekao on the market through equity-linked instruments
expiring in December 2019.
Later on Thursday the bank said it had completed placement
of the instruments for a total aggregate value of around 500
Proceeds from the deal, which will be used for general
corporate purposes, are expected to generate a capital release,
the lender said.
The sale of Pekao to state-run firms is part of the ruling
Polish Law and Justice (PiS) party's plan to "re-polonise" the
Although the euro sceptic government failed to buy a smaller
bank from Austria's Raiffeisen Bank, the Pekao deal
means Polish capital will control 53 percent of the sector, up
from 43 percent beforehand.
Analysts say the banks are important for Poland to finance
ailing investment in a country whose economy slowed far more
than expected in the third quarter to 2.5 percent.
Without fast economic growth, the government will be unable
to find long-term funding for the broad social programmes the
PiS pledged during its election campaign, economists say.
PFR Chief Executive Officer Pawel Borys denied the state
development fund invested in Pekao for that reason.
"If you're asking if we bought Pekao to conduct important
economic projects then I will say that we don't need additional
capital, PFR's capital is sufficient," he said.
($1 = 4.1200 zlotys)
(1 euro = $1.0790)
($1 = 0.9273 euros)
(Additional reporting by Silvia Aloisi; editing by David Clarke
and Alexandra Hudson)