Poland's financial watchdog KNF is considering taking steps to encourage banks to lend to each other more, fearing that a stalled interbank market would discourage lending and hurt the wider economy, its deputy head told Reuters in an interview. Polish banks, concerned with the impact of the eurozone debt crisis on the wider economy, have become increasingly reluctant to lend each other funds.
They also keep some 80-90 billion zlotys ($23-$26 billion) at the central bank. The dwindling of longer-term borrowing between banks may in the long run mean that companies would face a more difficult time finding funding, forcing them to cut investments and hurting the relatively resilient Polish economy. "The banks are lending to each other for a day, but for three months, rarely," KNF's Wojciech Kwasniak said in an interview cleared for publication on Thursday.
"If there is a need, we will issue a recommendation in which we would describe what is the basis for setting up limits in co-operation on the interbank market. We can also check risk management at individual banks or prepare appropriate bills," Kwasniak said.
Poland's banks, which are 70 percent foreign-owned, have managed to avoid the worst of the excesses of the global financial crisis which has affected their larger western peers and some parents. But their performance has been affected by weak global markets and concerns over the state of Europe's economy, which could force some foreign owners to lessen their support.
Kwasniak said KNF wants banks to lessen its reliance on funding from their foreign owners and on fickle depositors. KNF, under a new head appointed in October, will also seek to avoid another war over customer deposits after a previous battle two years ago demolished profits at several lenders.
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