Polish Banking Veteran Jagiello Suddenly Quits State-Run PKO

Zbigniew Jagiello unexpectedly quit as chief executive officer of PKO Bank Polski SA after serving almost 12 years at the helm of Poland’s largest lender.

The decision sent shares in the state-run lender down more than 9% on Tuesday and fueled speculation that a long-running power struggle in the ruling coalition forced the resignation of one of Prime Minister Mateusz Morawiecki’s closest allies. PKO didn’t give a reason for the CEO’s departure, effective June 7.

Jagiello, 57, managed to survive numerous waves of purges of executives at state-controlled banks over past years and stayed relatively independent as politicians battled over appointing loyalists to leading corporations. His resignation comes as PKO prepares to resolve its foreign-currency loans with out of court settlements, blazing a trail for other Polish lenders.

Polish Banking Veteran Jagiello Suddenly Quits State-Run PKO

“Jagiello’s unexpected departure will probably erode investor sentiment given the unknown circumstances,” said Bloomberg Intelligence’s analyst Tomasz Noetzel. “Fears of increased political interference may narrow PKO’s valuation premium with concerns arising over its long-term strategy after the FX-loan problem is sorted.”

PKO didn’t indicate who could replace Jagiello, who is leaving a year into his forth term at CEO, and gave no details about the looming selection process. Karol Manys, a spokesman for the Ministry of State Assets which oversees state-run companies, didn’t answer calls seeking comment.

Even though Jagiello seldom publicly waded into politics, he was a heavyweight in Poland’s increasingly state-controlled business world. In February, newspaper Gazeta Wyborcza reported that Morawiecki favored the CEO to succeed central bank Governor Adam Glapinski, whose six-year term runs out in mid 2022.

Last month, President Andrzej Duda touted Glapinski for a second term, somewhat clouding Jagiello’s prospects.

‘Backward Incumbent’

Close ties to Morawiecki, who was the CEO of Banco Santander SA’s unit in Poland before entering politics six years ago, allowed Jagiello to be more selective in supporting state projects, including a decision to stop financing government-controlled utilities in the construction of new coal-fired power plants.

Unlike state peers Bank Pekao SA and insurer PZU SA, PKO didn’t acquire lenders in Poland in recent years as Jagiello was concerned about a rift between PKO and smaller banks with profitability issues. He oversaw PKO’s push into digital banking that boosted profitability of the lender once known mainly for tending to pensioners. Under his watch, the bank achieved higher profitability than peers.

Polish Banking Veteran Jagiello Suddenly Quits State-Run PKO

“Jagiello changed PKO from a backward incumbent to one of most efficient entities in the industry,” said Marcin Materna, an analyst at Bank Millennium SA. “For his successor, it may be difficult to regain market trust, given specific risks for a state company.”

PKO shares dropped as much as 9.2%, the most in nearly 14 months, and traded at 34.07 zloty, 8.3% down on the day, at 3:22 p.m. in Warsaw. This year, the bank advanced 18%, compared with a 5.5% gain of Warsaw’s benchmark WIG20 index..

In his latest interview published on Tuesday, Jagiello said he saw no attractive bank takeover targets in Poland and warned of potential overheating in the local housing market as record-low interest rates pushed more Poles into riskier real-estate.

©2021 Bloomberg L.P.

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