Polish banks team up to create protection scheme

(Reuters) -The biggest commercial banks in Poland have teamed up to create a protection scheme to help ensure their liquidity and solvency, the banks said on Tuesday.

Alior Bank, BNP Paribas Bank Polska, ING Bank Śląski, mBank, Bank Millennium, Bank Pekao, PKO BP and Santander Bank Polska have all agreed to join.

The scheme – which needs to be approved by Poland’s KNF financial regulator – will run in parallel to existing institutional solutions, with banks obliged to make annual payments to the Bank Guarantee Fund (BGF).

Poland’s biggest lender PKO BP estimated that its contribution to the planned fund would be 872 million zlotys ($203.7 million), which will impact its results this year.

However, mBank brokerage analyst Michal Konarski said the initiative should be neutral or even slightly positive for banks’ results, pointing to the likelihood that the BGF will lower the amount each bank will need to chip in to the deposit guarantee scheme.

“To sum up, these funds will balance themselves out and the banks will not lose from it, you could even say that they will benefit from it,” Konarski told Reuters.

The Polish banking index was down about 1% in early trade.

Banks are expected to get a boost this year from rising interest rates, but this could be offset by initiatives to help mortgage payers.

Polish Prime Minister Mateusz Morawiecki said in April that as part of the plan to help borrowers, a new 3.5 billion zloty aid fund would be created and funded from banks’ profits.

The government has also proposed payment holidays for borrowers, which could cost the sector nearly 30 billion zlotys in 2022-23.

The banks plan to form a joint stock company which will manage the protection scheme and funds they contribute to it.

Each will put in “0.40% of the amount of the guaranteed funds of the given bank covered by the mandatory deposit guarantee scheme,” they said.

($1 = 4.2815 zlotys)

(Reporting by Anna Pruchnicka; editing by Jason Neely and Emelia Sithole-Matarise)