Connect with us

Top Stories

Scope affirms Poland’s credit rating of A+ with Stable Outlook



How to Build Credit Without a Credit Card

Strong economic growth, credible monetary and fiscal framework, adequate external buffers, and sound banking system support the rating; high reliance on capital inflows, budgetary pressures, political and demographic headwinds are limitations.
For the detailed rating report, click here.

Scope Ratings GmbH has today affirmed Poland’s A+ long-term issuer and senior unsecured local- and foreign-currency ratings, along with its short-term issuer rating of S-1+ in both local and foreign currency. All Outlooks are Stable.

Rating drivers

Poland’s solid macroeconomic performance with overall annual real GDP growth averaging 3.6% over the last 10 years has been supported by a strong policy framework including credible monetary and flexible exchange rate policy, resulting in low economic and financial volatility alongside reduced external risks, which support the A+ sovereign rating. In 2017, Poland grew by 4.6%, underpinned by a buoyant labour market and record consumer confidence. For 2018-2019, Scope expects GDP growth to remain robust, gradually slowing to 4.1% this year, before normalising to 3.5% in 2019. Investment growth has resumed in the second half of 2017 and is likely to continue in 2018-19, benefitting from the high EU budget transfers that Poland secured in the 2014-20 budget framework as EU funds are frequently used as seed money in large projects to attract domestic investment. Moreover, the current EU budget framework includes an additional three-year period during which countries can still draw funds, thereby increasing planning certainty. Investment growth is further underpinned by still-low interest rates and a liquid, profitable and well-capitalised banking system.

Poland’s A+ ratings are further supported by its moderate current account vulnerabilities. The country has run nearly balanced current accounts between 2015 and 2017, despite strong private consumption growth. Moreover, the high quality of funding sources for earlier current account deficits is exhibited in the mainly long-term foreign direct investment flows, intra-company loans and EU structural funds, thus ensuring that the country is less exposed to capital flight during periods of financial market turbulence. In 2017, the current account swung into a very small surplus of 0.2% (four quarter rolling sum), for the first time since 1995, reflecting improved competitiveness in business services. Thanks to its strengthened reserve adequacy, Poland was able to end the Flexible Credit Line arrangement with the International Monetary Fund in November 2017. Moreover, Scope highlights the favourable structure of Poland’s moderate foreign liabilities, of which around a third relates to non-debt instruments, i.e. stable forms of external financing including, among other instruments, equity and the reinvestment of profits.

Poland’s ratings are further underpinned by the sovereign’s fiscal consolidation efforts and favourable financing conditions that have helped notably reduce Poland’s interest payment burden over the last five years, allowing for more fiscal space. The general government deficit decreased to 1.7% of GDP in 2017 from 2.3% of GDP in 2016, mainly driven by strong tax revenue growth reflecting the supportive macroeconomic environment and improved tax compliance. Long-term budgetary pressures are increasing, however, as the government has stepped up spending on higher pensions, child benefits and public-sector salaries, leading to a broadly unchanged structural balance. Though the current fiscal stance is roughly neutral, the headline deficit is expected to widen slightly to 1.9% of GDP in 2018, also reflecting rising social benefits. The government remains committed to keeping the headline deficit below the Maastricht threshold of 3% of GDP.

Poland’s public debt is moderate and sustainable, in Scope’s view. General government debt decreased to around 50.6% of GDP in 2017 from 54.2% in 2016 and is forecast to continue declining to around 49.8% of GDP in 2019. Scope assesses Poland’s public-debt dynamics as sound due to their relative robustness across a number of scenarios over the projection period to 2023 as well as the support provided by a constitutional public-debt brake mechanism, which pressures public debt to not exceed 60% of GDP. The IMF expects debt-to-GDP to gradually decrease over the forecast period to around 45% of GDP in 2023, as robust economic growth, low financing costs and balanced primary fiscal accounts allow sustained debt reduction.

The banking sector remains liquid, profitable and well capitalised. The average total capital ratio remains at a level of 18% with most banks complying with supervisory requirements, including requirements to maintain adequate capital buffers. The quality of the loan portfolio is stable. In 2017, the total capital requirement rose due to the increase in credit risk weights related to forex housing loans originated in the past, which remain a potential vulnerability. However, Swiss-franc-denominated mortgage loans have diminished and the government has backed down from a previous proposal to mandatorily convert these loans into zloty. New proposals point to a voluntary mechanism incentivising banks to convert foreign-exchange mortgages over time, significantly reducing potential costs for banks compared with the original proposal.

Despite resilient growth, the Polish economy faces several challenges. While the short-to-medium-term growth outlook remains favourable, Poland’s long-term economic growth prospects are constrained by the expected decline in the working age population and slow productivity growth, underlining the need for increasing labour market participation and a more skilled workforce. Increasing bottlenecks in the form of labour shortages have been compensated for by large inflows of migrant workers out of Ukraine, helping contain wage pressures and inflation. However, the working age population has been falling nonetheless by 1% annually since 2012, creating a steadily rising skilled-labour shortage.

The government is committed to implementing structural reforms to boost productivity, private investment and labour force participation, which would help to increase potential growth and continue Poland’s process of convergence with EU living standards. The government’s Plan for Responsible Growth has identified the low savings rate, low productivity growth, and low labour force participation rate as the main challenges. It is Scope’s view that while some policies, such as lowering the retirement age in response to strengthening demographic headwinds, are not conducive to growth, other measures have been taken which will improve the country’s economic and social prospects, supporting poverty reduction and improving tax collection.

Ongoing political and policy uncertainty is set to continue. More frequent, abrupt regulatory changes are transforming the economic landscape, including some reversals of Poland’s previously strong record of liberalisation, with negative governance effects impacting macroeconomic sustainability. For example, the government has controversially placed judges loyal to the government in Poland’s constitutional court. Under the new regulations, which came into force in April 2018, the retirement age for Supreme Court judges has been cut to 65 years, effectively allowing the government to appoint new candidates. According to current opinion polls, the governing Law and Justice party is likely to perform strongly in the local and parliamentary elections in 2018 and 2019, respectively.

Tensions with the EU over the European Commission’s ‘Rule of Law’ procedure are ongoing. Scope views these tensions and the weakening of the rule of law and judicial independence in Poland with some concern. Although the risk of sanctioning mechanisms has not dissipated, it is Scope’s view, however, that Poland will navigate the current diplomatic disagreements without material negative consequences for the sovereign’s robust economic conditions in the medium- to long-term. However, future investments will largely depend on Poland’s macroeconomic outlook and on maintaining the stability and quality of the institutional framework including a predictable policy and regulatory environment.

Core Variable Scorecard (CVS) and Qualitative Scorecard (QS)

Scope’s Core Variable Scorecard (CVS), which is based on the relative rankings of key sovereign credit fundamentals, provides an indicative “A” (“a”) rating range for the Republic of Poland. This indicative rating range can be adjusted by the Qualitative Scorecard (QS), normally by up to three notches depending on the size of relative credit strengths or weaknesses versus peers based on qualitative analysis. For the Republic of Poland, the following relative credit strengths have been identified: i) growth potential of the economy; ii) fiscal policy framework; and iii) market access and funding sources. Relative credit weaknesses are: i) vulnerability to short-term external shocks; and ii) poor recent events and policy decisions. The combined relative credit strengths and weaknesses generate a positive one-notch adjustment and indicate a sovereign rating of A+ for the Republic of Poland. A rating committee has discussed and confirmed these results.

For further details, please see Appendix 2 of the rating report.

Outlook and rating-change drivers

The Stable Outlook reflects Scope’s view that rating risks remain balanced. The ratings/outlook could be upgraded if: i) additional structural reforms are implemented, thereby raising the country’s medium-term growth potential; ii) fiscal performance were to improve leading to further declines in public debt; and/or iii) the country’s external balance sheet were further strengthened. Conversely, the ratings/outlook could be downgraded if: i) economic growth slowed down for a protracted period; ii) fiscal slippage resulted in weakening debt sustainability; and/or iii) the political conflicts with the EU escalated, weakening Scope’s governance assessment.

Rating committee

The main points discussed by the rating committee were: i) growth potential of the economy; ii) economic and fiscal policy framework; iii) market access and funding sources; iv) public debt sustainability; v) current account developments; vi) recent events and policy decisions related to the reform of the judicial system; vii) the impact of reductions in the retirement age on the labour market; and viii) peers comparison.

Top Stories

Seven lessons from 2020



Seven lessons from 2020 1

Rebeca Ehrnrooth, Equilibrium Capital and CEMS Alumni Association President


Attending a New Year’s luncheon on 31 December 2019, we played a game that involved predicting the world in 2020. Some of the questions included: would Uber become profitable? Would the three-decade bond rally finally come to an end? Would the US hit a recession?

Unlike any of our predictions based on a traditional approach to business and predicting, we now know that 2020 became the year where business, professional and personal plans were turned upside down, reshaped and put-on hold. The proverbial black swan had arrived.

As revealed in a new CEMS Guide to Leadership in a Post-COVID-19 World, to which I contributed, the COVID-19 pandemic has exposed deficiencies in the 20th Century vision of leadership, giving a rare opportunity to question the status quo.

So, what are the main lessons from 2020?

  1. Humans are enormously adaptive.  This is not an extinction scenario. The world is getting used to dealing with global human disaster which may become a recurring event. Life continues guided by new parameters.

  1. No sector or country is immune to rapid change. Just as the leveraged finance and equity markets ground to a halt during the Global Financial Crisis, we have seen a disruption in the financial markets (including M&A) in 2020, including a significant redistribution of wealth between sectors; think tech vs airlines and the hospitality industry. When a market is disrupted it has secondary and tertiary effects such as less work for accountants, lawyers, financiers etc.


  1. Location is not as important anymore. The belief that finance staff need to be based in one of the financial capitals to be effective has been forever altered. Pursuing a career in finance from anywhere is becoming possible. However, it’s likely that over time, financial controls and human interaction will move the work model back towards the traditional office approach, as work is a critical sanctuary for people. While working from home may allow more time for family, chores and sports, it is mainly effective for people who already have their internal and external networks. For junior employees it presents a notable challenge as they may be forced to spend their formative years without a chance to really build their networks.


  1. Change is likely to be lasting. The opportunity for alternative finance and tech focused providers is enormous and 2020 will accelerate this shift. For example, many retail banks are providing rather poor customer service, blaming the pandemic. Even the most loyal customers will be heading elsewhere. For recent graduates and current students this is a major shift; future winners and key employers may not be names we are used to seeing in the headlines.


  1. There will be a spotlight on leaders with visionary strategy and understanding of the operations. 2020 showed many politicians and business leaders behaving like they were playing a game of snakes and ladders, rather than executing a thought-out strategy. The next wave of thoughtful leadership is urgently required.


  1. Collaboration leads to success. The definition of a pandemic is an infectious disease prevalent worldwide. A global problem requires a collaborative solution rather than each country and industry on their own. Quoting Steven Riley, professor of infectious disease dynamics at Imperial College London: “Once you have the knowledge and you share the knowledge, then you are able to take measures to push transmission much lower”. This principle is transferable to management education. In a world more complex than ever, investing in a degree is hard currency. Combined with the full global alumni network, corporate partners and schools, CEMS is capital that doesn’t depreciate.

  1. Resilience has become a watch word. Saint-Exupéry’s quote resonates with me: “If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” We are in a new paradigm – so prepare for the next change. For COVID-19, while we hope that the vaccine will soon upon us, the broader long-term positive challenge remains.
Continue Reading

Top Stories

Data after Brexit: How does the end of the transition affect GDPR?



UK's Post Brexit productivity puzzle

By John Flynn, Principal Security Consultant at Conosco

The UK has officially left the European Union now that the transition period has ended on January 1st 2021. But this could raise issues with one of the biggest bugbears for many companies – the international transfer of personal data.

Businesses can relax, somewhat – GDPR, which took businesses months to get their heads around, is not being replaced. It will continue as the UK GDPR 2018, and will still be based on the criteria of the Data Protection Act of 2018. However, the UK will retain the right to change the UK GDPR as it sees fit in the future.

The main changes apply to those who receive data coming into the UK from Europe. Transfers from the UK to other countries can continue under existing arrangements.

We know it can be difficult to cut through the legal jargon, so we have simplified what you need to know to protect yourself and your data:

1 – Update your privacy notice

Most businesses do not have the correct clauses in place ahead of January 1st, potentially exposing their liability, should something happen to their data. All company privacy notices online will need to be updated to specifically state ‘UK GDPR’, as opposed to ‘EU GDPR’. You will also need standard contractual clauses in place, which cover both parties – those transferring and those receiving the data.

 The Information Commissioner’s Office (ICO) has a list of what needs to be included in the standard contractual clause here. The ICO will remain the UK regulator for data protection, regularly liaising with each EU member state.

This also applies to Multi Corporate Groups who operate in multiple countries, who need to update their documentation and privacy notice to expressly cover the data transfers.  The UK has applied for an adequacy assessment, which would negate the need for contractual clauses, however this has not yet been approved by the EU.

2 – Data privacy assessments

Any company which runs applications and software should always perform a Data Privacy Impact Assessment. This was also in the guidelines before, but these assessments are now more important for those who outsource their IT operations internationally.

For example, when using a service such as a cloud-based system, the company must be sure that its service provider adheres to UK GDPR and stores the data within the European Economic Area (EEA), or has a binding corporate agreement with the company, where data is stored outside of the EEA. You should also, as mentioned above, make sure that a contractual clause is in place.

3 – Review local legislation

Contracts should now have contractual clauses that specify the responsibilities of the data controller and the data processor. If you are receiving personal data from a country territory or sector covered by a European Commission adequacy decision, the sender of the data will need to consider how to comply with its local laws on international transfers. You should check local legislation and guidance in this case.

4 – Cyber Security health check

The ICO is increasing its capacity and efforts to crack down on data breaches, post-Brexit. Now is a great time for all companies to have a health check to understand their Information Security posture and GDPR compliance. Nobody wants to be caught handling data improperly and fined when it could have been prevented with education and training.

A gap analysis performed by an expert is money well-spent. It’s also a fact that companies that have cybersecurity and Information Security controls are not only able to better defend against attacks but are also far better placed to recover from an attack.

Looking forward

It’s important that all businesses – large and small – are properly preparing their data storage and transferring for the 1st January. ICO has been busy setting examples by fining large, high-profile companies for failing to keep millions of customers’ personal data safe.

It will continue to come down hard on the data breaches of personal identifiable information and special categories of data. The saying ‘prevention is better than a cure’ rings truer than ever this year, and you will thank yourself if you make the efforts to properly store your data now, and not when it’s too late.

Continue Reading

Top Stories

2020 reflections and 2021 outlook



2020 reflections and 2021 outlook 2

By John Hunter, Head of Banking and Fiduciaries, Finance Isle of Man

Reflections on the most surreal year

The Covid-19 pandemic has completely changed the world as we knew it, resulting in catastrophic loss of life and fears of a downturn hang over global economies like a sword of Damocles. In the UK, the new strain has further exacerbated the situation. As I am sure many have already said we are living in what could be called the most surreal times. People have been trying to cope with this “new normal”, by changing their lifestyles and evolving behaviours.

The Isle of Man responded swiftly to the pandemic by closing its borders and enforcing social restrictions which everyone respected and adhered to. Socially and culturally the Island demonstrated all the good things that come from living on a relatively small Island where community still means so much.

The Isle of Man’s financial services sector adapted quickly, seamlessly transitioning to working from home. The banks too adopted flexible remote working practices and continued to support clients around the world helping them navigate the challenging situation and making the most of any opportunities that arose.

Although there is no substitute for face-to-face interactions, we all embraced web-conferencing platforms like Microsoft Teams and Zoom to stay connected with contacts around the world and build and nurture business relationships, whether it was with financial services firms or high net worth individuals looking to relocate to the Island.

Furthermore, a priority for the Isle of Man has been to reinvigorate the business and cultural ties with South Africa. In a normal world, we would have travelled to the country, held in-person meetings with businesses and industry representatives and talked about building on our wonderful historic ties. However, because of the scale and breadth of disruption we had to change all our plans! We hosted a virtual roadshow which comprised a series of webinars exploring why it has never been more important for South African businesses and individuals to choose the right jurisdiction for long term financial planning.

Looking ahead to the future

We are all hoping that the global rollout of vaccines will provide the pathway to some form of return to normality and all the things people are missing will be back. Like amidst all periods of immense turmoil, interesting, new possibilities have emerged such as the revolution in work culture and a renewed importance of being close to nature and green spaces is. And these possibilities can help reshape society for the better.

The global economic recovery and rebuild might seem further away in the current environment especially amidst the new lockdowns. But we are confident in the resilience of economies and are hopeful that different industrial sectors and governments working together would result in green shoots.

The financial services industry has an important role to play in getting the world economy back on its feet. It is a core component of the solution to continue facilitating the financing of corporates, as well as to develop sustainable finance and nurture digital technologies which have proven to be vital during the pandemic. The sector should continue its cooperation and collaboration with governments and regulators to ensure efficient capital flows and financial stability for businesses and individuals.

Banks too have a crucial role to play as they are instrumental to the effective transmission of monetary policies and stimulus packages. As mentioned in a report by EY: “Financial insecurity in the wake of COVID-19 will require banks to boost consumer confidence and help build a more resilient working world.”

We expect the Isle of Man’s financial services sector and banks to continue navigating the situation with resilience as they have been doing thus far and contributing to the global recovery process. Also, we truly hope this will be our busiest year ever (subject to our ability to travel), with an extensive global schedule of planned activity to promote the Island as an international financial centre of excellence and innovation. Personally, I had planned to be in South Africa for the British & Irish Lions tour, but regrettably, it might not take place and as such we will look forward to catching up with friends there as and when we can.


No doubt, there are significant challenges for the world ahead but as Albert Einstein said: “in the midst of every crisis lies great opportunity”. And it is this opportunity that we all need to work together to identify and make the most of. We are confident that in 2021 the Isle of Man will continue to support financial services businesses help their clients, employees, and the wider society through these surreal times. We are all in this together.

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Latest Articles

First of a kind Virtual Coffee Machine app with social meeting moments to support workforce wellbeing in a remote workplace 3 First of a kind Virtual Coffee Machine app with social meeting moments to support workforce wellbeing in a remote workplace 4
Technology2 hours ago

First of a kind Virtual Coffee Machine app with social meeting moments to support workforce wellbeing in a remote workplace

Powell Software’s first in a series of wellbeing technology innovations help remote employees socially connect with colleagues and keep the...

Most Video Content Created in the Summer Months, Finds Veritas Research Most Video Content Created in the Summer Months, Finds Veritas Research
Technology3 hours ago

Top 5 Ways To Lose Your Video Files

There are lots of reasons why you can lose video files in your system or device. While some of these...

FSS and India Post Payments Bank AePS Partnership Advances Financial Inclusion in India 6 FSS and India Post Payments Bank AePS Partnership Advances Financial Inclusion in India 7
Finance3 days ago

FSS and India Post Payments Bank AePS Partnership Advances Financial Inclusion in India

New Delhi, January 12th,2020: FSS (Financial Software and Systems), a leading global payment processor and provider of integrated payment products,...

Seven lessons from 2020 8 Seven lessons from 2020 9
Top Stories3 days ago

Seven lessons from 2020

Rebeca Ehrnrooth, Equilibrium Capital and CEMS Alumni Association President   Attending a New Year’s luncheon on 31 December 2019, we...

Over a quarter of Brits now have an account with a digital-only bank 10 Over a quarter of Brits now have an account with a digital-only bank 11
Banking3 days ago

Over a quarter of Brits now have an account with a digital-only bank

The number of Brits with a digital-only bank account has gone up by a percentage increase of 16% Almost 1...

Fintech M&A: the terrible teens? Fintech M&A: the terrible teens?
Business4 days ago

How fintech companies can facilitate continued growth

By Jackson Lee, VP Corporate Development from Colt Data Centre Services The fintech industry is rapidly growing and, in the...

gbaf1news gbaf1news
Technology4 days ago

BNP Paribas joins forces with Orange Business Services to deploy SD-WAN for 1,800 retail sites in France

Co-construction approach ensures business continuity during deployment BNP Paribas has chosen Orange Business Services to deploy an SD-WAN solution in...

Managing Operational Resilience And Safeguarding Data Are Core To Sustainable Digital Financial Services Managing Operational Resilience And Safeguarding Data Are Core To Sustainable Digital Financial Services
Business4 days ago

2021 Predictions: Operational Resilience Takes Center Stage

Breaking down barriers between Risk and Business Continuity By Brian Molk, Fusion Risk Management What a year! Simply put, the global...

Five Workplace Culture Trends of 2021 16 Five Workplace Culture Trends of 2021 17
Business4 days ago

Five Workplace Culture Trends of 2021

5 January 2021 – 2020 – a year like no other – is responsible for driving organisational change, especially workplace...

The Impact of the Digital Economy on the Banking and Payments Sector 18 The Impact of the Digital Economy on the Banking and Payments Sector 19
Banking4 days ago

The Impact of the Digital Economy on the Banking and Payments Sector

By Gerhard Oosthuizen, CTO Entersekt. New banking regulations, digital consumers, the eradication of passwords, contactless technology – these are just...

Newsletters with Secrets & Analysis. Subscribe Now