The Regulator

By Brandman, James | Global Finance, September 1999 | Go to article overview

The Regulator


Brandman, James, Global Finance


Bio

Name: Hanna GronkiewiczWaltz

Age: 46

Position: Governor,

Norodowy Bank Polski (National Bank of Poland) since 1992

Background: Former law professor and member of Solidarity; presidential candidate, 1995

Akerfuffle over the level of foreign control in Polish banking is ending tremors through the international business community in Poland. Caught in the middle is former law professor Hanna GronkiewiczWaltz, Poland's central bank governor.

The fuss follows the recent sale of a strategic stake in Pekao, the country's largest commercial bank, to UniCredito Italiano of Italy, which acted in partnership with German insurer Allianz. Public interest in the issue has also been whipped up by the announcement of merger talks between Bank Handlowy Poland's largest corporate bank, and BRE, another Polish bank that specializes in corporate clients. Bankers and politicians are waiting for the terms of a possible deal, from which they hope a more "Polish" bank will emerge. A straightforward merger could dilute the level of foreign control, since Germany's Commerzbank has 49% of BRE while Handlowy's largest shareholder, J.P Morgan of the United States, has only 12% of that bank.

The president of the Warsaw Stock Exchange, Wieslaw Rozlucki, is now leading a lobby calling for the government to start discriminating in favor of local companies at the expense of foreign capital. Meanwhile, GronkiewiczWaltz faces emerging skepticism in Poland about foreign capital levels, the internationalization of the economy, and entry into the European Union.

James Brandman from Global Finance spoke with GronkiewiczWaltz in Warsaw.

GF: Financial services offered by Polish banks are still quite limited.What can be done to diversify the banking sector?

HG-W: About a third of Poland's population does not use banks, but for the other two thirds there are more and more new products. As well as Polish banks, there are now banks that are 100% foreign-owned-for example, Citibank, Deutsche Bank, Bank Austria.

GF: Will lifting the remaining restrictions on the entry of foreign banks this year help kick-start the development of the banking industry?

HG-W: We have about 20 foreign banks, so I don't think there is room for more banks because of the competition. It has nothing to do with administrative restrictions on licensing because there aren't any.

GF: Banks complain that stiff regulation is affecting their competitiveness. How are you responding?

HG-W: We're simply adjusting our regulation to EU standards.They are complaining mainly about the high reserve requirements, the average for which is about 11%.That's relatively high compared with reserve requirements in developed countries. But it's a very complex subject. We would like to reduce our reserve requirements, but that would absorb liquidity. We would also like to issue bonds rather than decrease reserve requirements. …

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