Bank Polska Kasa Opieki (PEO) Status update summary

Strategic reorganization and transaction structure

• A major reorganization will merge two listed entities into a single holding structure, optimizing capital and simplifying governance, with a two-stage process involving the creation of a holding company and a merger with the bank.

• Shareholders of the new holding company will receive Pekao shares currently held by PZU and newly issued Pekao shares.

• The process includes delisting one entity, with the State Treasury retaining a significant stake, and the pro forma shareholder structure based on June 2025 share prices.

• The reorganization is designed to comply with evolving regulatory requirements, including CRR III and Solvency II.

• The transaction is supported by major shareholders, regulators, and government ministries.

Capital management and impact

• The transaction aims to free up approximately PLN 20 billion in capital, with estimates of up to PLN 24.6 billion in total excess capital post-transaction.

• Pekao's current excess capital above 14.5% TCR is PLN 3.9bn, with the merger potentially releasing an additional PLN 10.7bn.

• Further optimization or divestment of Alior could release up to PLN 7.0bn more, leading to a total of up to PLN 21.6bn in excess capital.

• The transaction is expected to elevate the total capital ratio (TCR) to around 23%, with own funds post-transaction estimated at PLN 56 billion.

• Freed-up capital could support additional credit creation of PLN 100–200 billion, M&A activity, or increased dividends.

Dividend policy

• PZU aims to pay out at least 50% of net profit as dividends for 2025-2027, while Bank Pekao targets a 50-75% payout ratio.

• Dividend policies are expected to remain robust, with both institutions committed to maintaining historical payout levels.

• The combined entity will provide stable and predictable dividend payouts while maintaining sufficient equity for operational growth.