Polish Bank Pekao has signed a memorandum of understanding (MOU) with insurance company Powszechny Zakład Ubezpieczeń (PZU) on a potential merger between the two financial institutions. 

The financial terms of the agreement remain undisclosed.  

The agreement outlines the intent to prepare for a merger, which remains subject to the implementation of necessary legislative changes. 

If completed, the transaction would involve PZU first demerging by transferring its operations to a wholly owned subsidiary and becoming a holding company, then merging into Bank Pekao as the acquired entity. 

According to the announcement, the signing of the MOU represents the early stages of the planning process.  

Completion of the merger is conditional on several factors including the finalisation of transaction documentation, legislative amendments, and obtaining required regulatory and corporate approvals from the general meetings of both entities. 

The merger aims to simplify the group’s ownership, enhance governance, streamline the bancassurance model and consolidate operations under one listed entity.  

It is also expected to generate revenue synergies, diversify income and support stable dividend payouts. 

The completion of the merger, slated for June 2026, is projected to release a capital surplus of approximately 15bn ($4.02bn)–20bn zlotys.  

It is based on capital adequacy and solvency requirements that the current group structure would be expected to meet from 2027 onwards. 

As part of the planning, the parties have also agreed to develop a strategy for Alior Bank, a subsidiary of PZU.  

PZU Group, established in 1803 as Poland’s first insurance company, operates in Poland and central/eastern Europe, expanding into investments and healthcare.

Its 2016–20 strategy emphasised banking sector growth, starting with a 25.19% acquisition of Alior Bank in 2015.