Prime Minister Morawiecki hits the banks. Strong sell-off of bank shares

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The announcements of Prime Minister Mateusz Morawiecki will significantly reduce this year’s profits of the Polish banking sector. Investors reacted with a strong sell-off of bank shares.

– Commercial banks take undue advantage of rising interest rates; the rates should be adjusted to real deposits banking at the level of 3-4 percent. – Prime Minister Mateusz Morawiecki said on Monday. In addition to credit holidays for borrowers, the head of government also announced an increase in quasi-tax burdens for the banking sector.

Banks would “donate” to the Aid Fund in the amount of PLN 3.5 billion. – It will be a fund that will not be financed from the state budget. These are all funds that will come from the commercial banking sector, from the profits of commercial banks, “said the Prime Minister during the European Economic Congress in Katowice. In addition, the government wants banks to allocate an additional PLN 1.4 billion to the Borrowers Support Fund in 2022, 2 billion in 2023, and possibly even PLN 5 billion

There is also an important proposition the postulate to replace the Wibor rate with the Overnight rate in loan agreements.This would mean a decline in credit spreads on banks’ earnings. – From January 1, 2023, together with the market regulator, but above all in cooperation with the Sejm, we will impose an obligation to use a non-WIBOR, transparent rate from the interbank overnight deposit market, announced the head of the government.

When it comes down to it, we are generally talking about ~ 12-15bps lower rate. The NBP will offset this with one stronger rate hike. And when expectations for cuts come, borrowers will be harmed. An absurd idea that further undermines credibility to the system. https://t.co/g8qqqyoKPa

– Mikołaj Raczyński (@MikRaczynski) April 25, 2022

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Investors reacted quickly to the prime minister’s comments. At 11:20, PKO BP shares fell by 6.8%, Pekao SA by 8.2%, and mBank and Millennium by nearly 5%. The WIG-Banks index fell by 6%.

KK

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