Italian banking group UniCredit is in talks with Polish insurer PZU for sale of its stake in its Polish arm Bank Pekao.

The move is part of the Polish government's broader strategy of taking back control of the country's banking sector from the hands of foreign investors.

Through the stake sale, UniCredit aims to strengthen its capital base. Last month, the lender sold 10% of Bank Pekao as part of its strategy to boost capital under new CEO Jean-Pierre Mustier.

Under the deal, the bank offloaded 26.2 million existing ordinary shares in the Polish subsidiary to institutional investors for PLN3.3bn (€749m). The transaction boosted UniCredit Group’s CET1 ratio by about 12 basis points, the Italian lender said.

The bank continues to own a 40% stake in Bank Pekao following the sale.