By Adrian Krajewski and Lionel Laurent
WARSAW/PARIS (Reuters) - France's BNP Paribas (BNP.PA) has joined the bidding for the Polish arm of Dutch lender Rabobank (RABO.UL), aiming to strengthen its position in eastern Europe's largest economy in a deal that could be worth about 1 billion euros ($1.4 billion).
France's biggest lender said on Thursday it had made a non-binding bid for Bank BGZ (WSE:BGZ), confirming media reports and joining Italy's UniCredit (UCG.MI), which said last month it had entered a preliminary offer for Poland's No. 11 bank by assets.
Rabobank is reviewing options for Bank BGZ and has not officially put it up for sale. But analysts think it may cash in after U.S. and European regulators fined it $1 billion in the Libor rate rigging scandal.
Poland's banking industry is undergoing a period of change, with some troubled foreign banks selling businesses there to boost their capital positions, but others keen to strengthen their foothold in an economy which has outperformed much of the euro zone in recent years.
BNP has said it is looking to expand into faster-growing markets and buying BGZ could yield benefits from integrating it with the group's existing corporate and investment-banking activities in Poland (BNP.PA).
Poland's banking sector has for years been under strict supervision and has been relatively healthy in comparison with those of many other European nations.
With its mostly rural network, BGZ has also attracted Spain's Banco Santander (SAN.MC), as well as a combination of eastern Europe's largest insurer PZU (WSE:PZU) and Poland's Alior Bank (ALRR.WA), sources told Reuters earlier this year.
But BNP is seen as the front-runner in the race for Rabobank's 98.5-percent stake in BGZ, thanks to its robust capital position compared with many rivals.
The French bank tried to buy Poland's Bank Zachodni WBK (BZW.WA) in 2011, but was pipped by Santander, which is putting together a No.3 local player.
WINNING OVER THE REGULATOR
With Poland's largest bank PKO (PKO.WA) busy integrating the local units of Nordea (NDA-SEK.ST) that it bought earlier this year, BNP could have a clearer road to striking a deal.
A Polish newspaper reported last month that BNP was bidding around 1 billion euros for BGZ and a deal could close this year. BNP has declined to comment.
Michal Konarski, analyst at Poland's BRE Bank, indicated a bid around that level would be a reasonable price, saying it would be a notch above BGZ's book value.
By comparison, the STOXX Europe 600 banks index (.SX7P) is trading at 0.92 times book value, according to Reuters data.
Konarski also thought BNP would be more keen on a deal than UniCredit or Santander.
"BNP should be more interested in buying BGZ as the deal could boost its position on the corporate side, where UniCredit and Banco Santander are strong via their Polish units," he said.
Any bidder, however, will have to win over Poland's financial regulator, which has so far been resistant to the idea of selling BGZ as a single entity.
Last week, BGZ and Rabobank's much smaller Polish business, Rabobank Polska, announced plans to merge in a move which analysts saw as an attempt to win over the regulator to a spin off of the combined business.
BNP's Polish business closed the first nine months of the year with a net profit of around half the 134.3 million zlotys ($44 million) booked by BGZ.
At 1135 GMT, BNP shares were up 0.6 percent at 53.75 euros, just ahead of the European banking index. BGZ shares were up 0.8 percent at 71.59 zlotys, valuing the business at about 3.6 billion zlotys ($1.2 billion).
($1 = 3.0837 Polish zlotys)
($1 = 0.7392 euros)
(Writing by Adrian Krajewski; Additional reporting by Agnieszka Barteczko; Editing by David Holmes and Mark Potter)