PKO Bank Polski SA and Bank Pekao SA denied media reports about a potential merger between the two lenders in 2018.

It is not true that PKO participated in talks about a potential merger with Pekao, PKO said in a statement emailed to S&P Global Market Intelligence on Dec. 8, adding that it is not involved in any projects regarding such a transaction and that the mooted merger is not an aim for 2018.

In a same-day statement, Pekao referred to the media reports as "fake news," adding that it plans to focus on "organic growth and building value for clients."

The Polish state is a key shareholder in both lenders. It owns a 29.4% stake in PKO, while state-controlled insurer PZU SA and Poland's development fund PFR jointly own a 32.8% holding in Pekao, having purchased the shares from UniCredit SpA earlier in 2017.

Citing sources close to the lenders, Rzeczpospolita and Parkiet reported earlier Dec. 8 that Poland's two biggest banks were discussing a merger that could take place in 2018, with the integrated bank to have a market share of one third, providing services to almost 15 million clients.

PKO CEO Zbigniew Jagiello reportedly told Rzeczpospolita that there is only room for four or five big universal banks in the Polish market and that PKO should not only be the leader of the Polish banking sector "but also the leader of its change."

The newspaper also cited PFR's head Pawel Borys as saying that a merger of the two financial institutions would be a good solution if Poland wants to play an important role on the EU's banking market in the next five to 10 years.