Poland has lured the nation's banks to finance pre-payments on EU programmes in return for a series of key legal changes, which should significantly boost banking sector bottom lines.
Poland is prepared to loosen rules on bad loan provisioning and is ready to offer banks interest on mandatory reserves, provided banks put back a portion of the gain into a fund supporting pre-payments towards EU-sponsored programmes.
Poland's banks have long complained that Polish risk provisioning rules are stricter than for their EU peers. At the same time, accounting and tax rules have made both provisioning and freeing up provisions excessively expensive. Banks have additionally lobbied to have mandatory reserve levels reduced to EU levels and to have some form of interest tied on to central bank deposits.
