POLAND - Kredyt Bank, the Polish unit of Belgian financial holding company KBC, has decided to sell its pension business to competitor PTE Polsat for an undisclosed price.

"The sale of our pension fund has been prepared for some time and is a result of the restructuring of Kredyt Bank's assets," said the bank's chief Malgorzata Kroker-Jachiewicz in a release.

The transaction is yet to be approved by the country's pension and insurance regulator KNUiFE.

Kredyt Bank and Polsat are among the smallest pension funds with 264 million zlotys (55.6 million euros) and 182 million zlotys respectively under management at the end of 2003. Poland's 16 pension funds manage total funds worth around 45 billion zlotys.

The Kredyt Bank's pension fund showed a 20.2% return for 2002-2003, compared to PTE Polsat’s 29.4%. The average rate for all 16 Polish pension funds was 26% in 2002-2003.

Poland kicked off pension reform in 1999, when state pension expenditures skyrocketed due to higher interest in early retirement and an unfavourable demographic trend. The reforms aim is to gradually replace the current pay-as-you-go system to a private system.

Kredyt Bank, Poland's seventh biggest bank, has been undergoing massive restructuring since last year to get rid of bad assets. Kredyt Bank posted a 1.5 billion zloty loss last year.

PTE Polsat is owned by the Polsat media group, which controls Poland's largest private TV broadcaster.

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