Bankruptcy fears for Poland’s credit unions Almost half of Poland’s credit unions are close to bankruptcy, as a collapse in the sector’s financial health strains the country’s banking bailout fund. The industry is a primary source of funds for millions of poor and working-class people, mainly in rural areas and smaller cities. According to Financial Times, of the 55 credit unions — known as SKOKs in Poland — that were operating 12 months ago, two have been declared bankrupt, two have been bought by banks in fire sales, and two have been forcibly merged. The Polish regulator Komisja Nadzoru Finansowego (KNF) has begun investigations into a further 24 it considers to be bankruptcy risks. While credit unions account for only 1.2 per cent of banking assets in the EU’s sixth-largest economy, the sector’s poor health is a worry for both Polish regulators, which promote the financial industry as one of the most robust in Europe, and traditional banks, which must foot the restructuring bill. “Generally problems and risks were building up in the SKOK industry for 20 years as they were operating outside the public supervision,” said the KNF. “Now . . . tidying up is under way.” The KNF estimates that the capital shortage in the credit union industry stands at about $420m. Several larger institutions are in such dire straits that the sector as a whole has a capital adequacy ratio of minus 0.85 per cent, against the 5 per cent minimum stipulated by law. The association of Polish credit unions did not respond to a request for comment. The sector’s two bankruptcies have used up about 25 per cent of Poland’s banking guarantee fund, which became responsible for credit unions in November 2013 and relies heavily on contributions from mainstream banks. The country faces new challenges since rapid growth followed the collapse of communist rule 25 years ago Since then the fund has demanded that banks double their contributions — to the sector’s disgruntlement. “It is not fair, generally speaking, that banks should cover all the expenses incurred by SKOKs,” said Krzysztof Pietraszkiewicz, president of the Polish Banking Association who also sits on the board of the guarantee fund. “This expenditure should be shared . . . by banks but also by the SKOKs themselves and by the state budget.” The bankruptcy last month of SKOK Wolomin saw the fund pay out close to $620m to depositors. The fund said it expected its reserves to be replenished only by the end of 2015. In addition the KNF has instigated reform procedures at 44 SKOKs to explore potential restructuring or sale to a commercial bank. “The regulatory supervision is very beneficial to both SKOKs and the banking sector, as it helps avoiding SKOKs’ bankruptcy. Such a scenario would be very harmful to the whole financial market in Poland,” said Franek Hutten-Czapski, senior partner at the Boston Consulting Group in Warsaw. “A fast restructuring of SKOKs will be a priority.” ift.tt/1xMqfh6 ift.tt/1qGUBZv [[Boost your social presence with NAIRALIKES nairalikes ]] #nigeria x #nairalikes #vanguardng
Posted on: Tue, 06 Jan 2015 02:27:58 +0000
Trending Topics
Recently Viewed Topics
© 2015