The head of BRE Bank criticized the Polish central bank’s efforts to revive the interbank market through currency swaps and open market operations, proposing an alternate plan to boost confidence among lenders.
Mariusz Grendowicz said that the “trust package” intended to boost liquidity has so far failed to revive the interbank market that seized up in recent weeks, with the central bank becoming the risk-free counterparty of choice. “For a confidence-building package it is not going to build confidence,” Grendowicz told the Reuters Central European Investment Summit on Tuesday. “If you dissect it, it’s essentially an intermediation package. It will lead to the central bank becoming the counterparty for all Polish banks, but it will not lead to the stimulation of the interbank market.”
Grendowicz said two better alternatives to avoid “the surrogacy” by the central bank would be government guarantees of interbank loans or procedures that would allow lenders to reveal some measures of the state of their financial condition. “Banks that are interested in building confidence would basically open their books to some extent with their principal counterparty and obtain a clean bill of health,” he said. “If I have clean hands, I should be more than happy to disclose.”
In an interview last week, the deputy head of Poland’s biggest bank, Unicredit affiliate Pekao, said the government might want to consider guarantees of interbank transactions if the market situation did not improve soon. Grendowicz said BRE, which is controlled by Germany’s Commerzbank, has so far managed to stay on track despite recent turmoil, not seeing any significant loss of deposits by nervous clients despite some recent volatility.
BRE has also not joined the growing number of the region’s banks to introduce measures to curb popular mortgages in Swiss francs because it was more conservative in extending and financing them, Grendowicz said. “To fund our growth in mortgages, we were the only bank to the best of my knowledge that was using not swaps, which were the cheapest alternative, but actually taking a three- to four-year loan in Swiss francs to fund the book,” he said. “We are extending between 35 and 60 million zlotys ($10-20 million) worth of mortgages each day, the vast majority of those in Swiss francs.”
BRE remains well capitalized, with its capital adequacy ratio at about 10%, he said. Grendowicz added that BRE would consider buying a local rival if it came up for sale but would be hesitant to sacrifice focusing on its own strong organic growth to concentrate on digesting an acquisition in current market conditions.
Troubled insurer American International Group Inc is mulling selling its Polish operations and Grendowicz said Fortis assets in Poland may also come up for sale. (Reuters)