October 17, 2017 / 1:33 PM / a year ago

UPDATE 1-Poland sticks to deadline for Raiffeisen Polbank IPO, warns of penalties

(Adds Raiffeisen comment and background)

WARSAW, Oct 17 (Reuters) - Polish regulator KNF said on Tuesday it could punish Raiffeisen Bank if it fails to list at least 15 percent of shares in its Polish unit in Warsaw by mid-May, after media reports that the Austrian lender was seeking a postponement.

KNF extended the latest deadline for the initial public offering in Raiffeisen Bank Polska (IPO-RBP.WA) by almost a year to May 15, 2018, after Raiffeisen Bank International (RBI) struggled to conduct an IPO this year.

Investors offered a much lower price for the Polish bank's shares than Raiffeisen was willing to accept because of its Swiss franc-denominated loan portfolio, which is seen by investors as a long-term risk to the bank's profitability.

Polish business daily Puls Biznesu reported on Monday that representatives of the Austrian bank wanted KNF to allow them to float the Polish unit, known as Raiffeisen Polbank, in 2019 at the earliest without its Swiss franc mortgage portfolio, which would make the offering more attractive.

Responding to the media reports, KNF said on Tuesday that RBI had failed to fulfill its previous commitment to hold an IPO by June 30, 2017.

The regulator said it was not considering changing its stance and warned that it may consider sanctions against Raiffeisen, such as stripping it of voting rights in Polbank after mid-May 2018 if it is not listed by then.

"The IPO is suspended and further discussions are being held with the regulator," Raiffeisen said, when asked for comment to KNF statement.

A third of Polbank's credit portfolio is held in foreign currencies, which are troublesome for borrowers, since the franc has almost doubled in value against Poland's zloty currency in the last decade.

Polbank holds 3 billion Swiss francs ($3.07 billion) of mortgages, out of 31 billion Swiss francs for the Polish banking sector as a whole.

In August, RBI's boss Johann Strobl said the bank wants to end discussion about the Swiss franc mortgages portfolio issue before listing the Polish unit.

KNF wants Polish lenders listed to provide greater transparency and security to the banking sector. ($1 = 0.9768 Swiss francs) (Reporting by Marcin Goclowski and Michael Schields, editing by Louise Heavens and Adrian Croft)

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