Polish state-controlled insurer PZU plans to merge with lender Pekao, the companies said on Monday, in a potential deal that would create a financial group with a combined market value of more than 100 billion zlotys ($26.9 billion).

The potential tie-up, which would rank as the biggest financial M&A transaction in Europe for at least 12 months according to LSEG data, is the latest to be announced in Poland, where expectations for consolidation in the banking sector have grown.

Austria’s Erste Group Bank last month agreed to buy the Polish arm of Spain’s Santander for 6.8 billion euros ($7.8 billion), while Citigroup’s Polish unit said last week it had agreed to sell its consumer banking business in the country to Velobank.

PZU, the country’s top insurer, and Pekao already have a relationship, with the former owning 20% of Poland’s second-largest lender. The Polish government, which is the biggest shareholder in PZU, welcomed the potential deal.

The announcement follows news that nationalist opposition candidate Karol Nawrocki had narrowly won Poland’s presidential election on Sunday, a major blow to the centrist government’s efforts to cement Warsaw’s pro-European orientation.

Pekao and PZU aim to complete the possible deal by the end of June 2026, which they said could free up about 15 billion to 20 billion zlotys ($4 billion to $5.3 billion) of the group’s capital surpluses.

Source: Globalbankingandfinance