UPDATE 2-Polish Millennium plans $350 mln cash call

By Chris Borowski and Piotr Bujnicki WARSAW, Nov 6 (Reuters) - Polish lender Millennium announced plans on Friday to tap its shareholders for 1 billion zlotys ($350.3 million), and joins a growing list of European banks using reviving markets to help boost their capital. The dilutive effect of the planned issue, however, mean Millennium was Warsaw's worst performing stock in the Friday session, falling as much as 15 percent after it also reported a surprising net loss of 87 million zlotys due to bad loan-related writedowns. By 1218 GMT, the stock was down 11.8 percent to 4.19 zlotys, its lowest in three months, valuing the bank at $1.25 billion. "I don't think this is an issue for growth but instead is a result of the fact that Millennium has several really tough quarters ahead," said Deutsche Bank analyst Marcin Jablonski. "If this were the end of losses, then why do an issue?" Fenando Bicho, a board member at the Polish arm of Portugal's Millennium bcp said it was unclear whether the lender would be able to eke out a net profit this year after falling 66 million zlotys in the red in the first nine months. Millennium is the second bank in Poland to turn to its owners to boost its finances, after the country's top lender PKO BP completed a 5 billion zlotys cash call last month. Other banks around the world, such as France's Societe Generale and BNP Paribas -- many of which are seeking to pay back state aid -- have also completed or announced share issues. Millennium Chief Executive Boguslaw Kott said the lender would also seek 200-300 million euros in mid-term funding from international financial institutions, but did not elaborate. The Polish bank had aggressively expanded its retail business in recent years before access to wholesale funding dried up, leaving it more vulnerable to the recent financial turmoil than many of its local rivals. A year ago it was forced to stop offering mortgages in Swiss Francs, eliminating one of its most vibrant products. It has also seen a growing number of corporate and retail defaults. Millennium wrote down 160 million zlotys in value in the quarter, in large part related to soured loans. "The planned rights issue should boost the consolidated capital and solvency ratio by more than 300 basis points which should allow the bank to become one of the best capitalised among Poland's top 10 ... banks," Millennium said. Millennium, which has a market capitalisation of about $1.4 billion, plans to issue up to 425 million shares to boost the total by as much as a third. Its Portuguese parent, which has a 65.5 percent stake, has declared it would buy its part of the new shares. Millennium bcp Chief Executive Carlos Santos Ferreira said he did not expect the Polish arm's cash call to affect the group's capital position and saw no need to unload assets. "We have (a) quite well balanced portfolio, we are happy what we have," he said at a news conference in Warsaw. The Polish lender also put forward a mid-term strategy, which sees its return on capital (ROE) at 15 percent and a costs-to-income ratio at below 60 percent. It also wants to keep its solvency ratio well above minimal regulatory requirements. ($1=2.872 Zloty) (Editing by David Holmes and Simon Jessop) Keywords: MILLENNIUM/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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