- PKO and other banks raised fees before Poland imposed new tax
- Ruling party lawmaker calls CEOs' testimony `pure marketing'
Poland’s leading commercial-bank executives faced lawmakers’ questions over rising fees on Tuesday amid tense relations between the nation’s new ruling majority and the financial industry.
Members of parliament inquired whether executives are transferring the costs of a new tax on bank assets on to their clients, which would be illegal, according to legislation in effect from the start of the month. Poland’s three-month-old government and its parliamentary majority have bashed the nation’s banks, which are mainly owned by foreign investors, for what they call a failure to share the fruits of the country’s economic growth over the past decade with ordinary Poles. While banks deny they’re passing on the costs, margins on Polish loans have historically been higher than those in the euro area.
“Banks need to operate safely,” Cezary Stypulkowski, chief executive officer at MBank SA, the country’s fourth-largest bank by assets, told reporters after meeting lawmakers. “It seems we were listened to and there is some sort of clarity introduced but I doubt that this will change the world.”
The financial industry is one of the main battlefields for Poland’s new government, which is also confronting retailers and has clashed with European leaders over its overhaul of institutions including the constitutional court and public media. Besides the new levy, set to siphon off about a third of the industry’s annual profit, banks face legislation to convert their foreign-currency mortgages into zloty, plans that may saddle lenders with billions of zloty in losses and which central bank Governor Marek Belka called “pure evil.”
Lenders such as state-controlled PKO Bank Polski SA, the nation’s biggest, as well as the local units of Raiffeisen Bank International AG and Commerzbank AG-owned MBank, have increased fees for various services since December. All three banks said the fee increases had nothing to do with the new levy.
“Banks explained that their higher fees are not related to the introduction of the tax, but we didn’t get answers to our questions about why they did raise them at the same time,” Andrzej Jaworski, who chairs the lower house’s public finance committee that summoned the bankers, told reporters after the meeting.
Deputy chairman Wieslaw Janczyk, also from the ruling Law & Justice party, said he was “disappointed” by the executives’ explanations, calling them “pure marketing” and threatening that parliament “has the tools” to reduce the fees banks charge.
The era of “high returns on capital in the banking industry is gone,” Finance Minister Pawel Szalamacha said on Jan. 4, stoking concern among investors about an uncertain legislative environment for lenders. The WIGBank index dropped 6.5 percent this year, pushing valuations to the lowest since 2009. The gauge advanced 0.8 percent on Tuesday, compared with a 0.1 percent decline in the main WIG20 index.
The ruling Law & Justice party promised that its new tax of 0.44 percent of lenders’ assets won’t drive up costs for bank customers. Last month Szalamacha called on PKO, along with smaller state-owned peers Bank Pocztowy SA and BOS Bank SA, to keep costs down and seek to poach clients if privately owned lenders raise their fees.
Bank executives attending Tuesday’s meeting, including PKO’s CEO Zbigniew Jagiello, Deutsche Bank Polska SA’s Krzysztof Kalicki and Raiffeisen’s Maciej Bardan, cited an annual revision of pricing, falling profitability and attempts to discourage clients from using older products among reasons for their increase. Wojciech Kwasniak, Deputy Chairman of the country’s financial market regulator, said banks will have limited ability to transfer the costs of the tax onto clients “because of the industry’s competitiveness.”
Deputy Finance Minister Konrad Raczkowski said the government will analyze reports that some banks controlled by foreign companies are moving “significant” assets abroad to avoid the tax. He didn’t name any banks or reveal the value of such transactions.