Poland's Banks Contribute to Deposit-Guarantee Fund After Lender's Failure
25 November 2015 - 11:37PM
Dow Jones News
By Martin M. Sobczyk
WARSAW--The failure of a small Polish lender this week, the
first bankruptcy in the local banking sector in 15 years, has
forced the country's largest banks to pay the equivalent of
hundreds of millions of U.S. dollars into a state deposit-guarantee
fund.
The country's financial market regulator on Monday filed for the
bankruptcy of SK Bank, one of Poland's smallest lenders with about
3.5 billion zlotys ($874 million) in assets.
Poland's largest bank, state-controlled PKO Bank Polski S.A.
(PKO.WA) with 251 billion zlotys in assets, said it would pay the
equivalent of $88 million into the fund that uses money pooled by
all lenders to guarantee customer deposits in the event of a bank's
failure. Italy's Bank Pekao S.A., a unit of Italy's UniCredit
S.p.A. (UCG.MI) and Poland's second-largest bank, said on Wednesday
it would pay the equivalent of $59 million into the fund.
In total, Polish banks will have to provide about $420 million
to meet the guarantees covering deposits in the failed bank, said
Fitch Ratings. That equates to about 12% of the Polish banks'
combined pretax profit for the nine months ended September this
year, putting pressure on the sector's profitability.
The Polish banking sector has otherwise shown strong resilience
to the financial crisis that began in 2008, posting record profits
in recent years. Poland didn't have to bail out any banks during
Europe's sovereign-debt crisis.
SK Bank suffered a run on deposits earlier this year after
incurring high losses on bad loans made to real-estate
developers--nearly half of its loan portfolio at the end of
September was considered non-performing. Poland's financial market
regulator said on Monday that no bank was interested in taking over
SK Bank.
The vice president of the Polish financial regulator, Wojciech
Kwasniak, said in an interview in local daily Rzeczpospolita on
Wednesday that the largest banks in Poland could continue buying
smaller peers but they should be careful.
"Let's remember that the top 10 and especially the top five
banks have particular obligations as to responsible management," he
said.
The Polish banking sector has undergone some consolidation over
the past few years, with Spain's Banco Santander S.A. (SAN.MC)
making the most aggressive moves. Most of the country's banking
sector is in the hands of banks headquartered in the eurozone. That
prompted Polish officials during the currency bloc's debt crisis to
push local banks to consider buying small lenders to reclaim some
of the sector from foreigners, an effort that has so far made
little headway.
Write to Martin M. Sobczyk at martinsobczyk@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 25, 2015 07:22 ET (12:22 GMT)
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