Poland's controversial new levy on banks threatens not only the sector's profitability but also the overall economic growth of this EU member, global ratings agency Moody's said in a Monday statement. The new levy "threatens to hurt credit growth because it reduces banks' capital creation, which risks adversely affecting Poland's economy and resulting in slower GDP growth."
Poland expects to see its economy expand by up to 3.8 per cent this year following a 3.5 per cent advance in 2015.
Moody's estimates that the new "tax will cost the (banking) sector about 4.4 billion zloty (one billion euros) this year, equal to around 32 per cent of banks' annualised earnings for the first 10 months of 2015."
The agency also warns that "a decline in net income would reduce banks' ability to absorb shocks."
Having clocked growth each year since it shed communism a quarter century ago, the nation of 38 million has long been regarded as Central Europe's powerhouse. That reputation was bolstered by sound fiscal management that saw debt remain low.
The bank tax was among several campaign promises made by Poland's populist-orientated Law and Justice (PiS) party that paved the way to its winning an absolute majority in elections last October. Its bank levy is designed to fund a raft of social spending measures including a child allowance, among others.
Moody's also warned against PiS government plans to introduce a conversion of foreign currency mortgages, predominantly in Swiss Francs, into the local zloty currency.
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