Merger of banks – the only way to avoid their bankruptcy

Merger of banks – the only way to avoid their bankruptcy

In a letter dated 26 October 2018, former Head of the Polish Financial Supervision Authority Marek Chrzanowski indicated that merging banks is a way to avoid bankruptcy in the cooperative banking sector. The letter also explained that it was necessary to amend the existing regulations, which would allow the Polish Financial Supervision Authority to take action in order to force the merger of banks with the consent of the acquirer.

As a matter of urgency, UKNF decided to amend the draft act amending certain acts in connection with the strengthening of supervision over the financial market. An article allowing banks to take over other banks in trouble has been introduced into the bill.

Zdzisław Sokal, President of the Bank Guarantee Fund, pointed out that the solution for bank acquisitions contained in the Act has proved successful in restructuring SKOKs and has been well evaluated in the context of smaller banks. Moreover, he pointed out that the use of this solution is recommended, e.g. by the World Bank.

The problem with insolvency concerns in particular banks with funds below EUR 5 million, which cannot join institutional protection systems, so it is not possible to apply to them support mechanisms with regard to their liquidity and solvency.

Source: www.bankier.pl/wiadomosc/KNF-laczenie-bankow-w-obecnej-sytuacji-rynkowej-i-prawnej-jest-jedynym-sposobem-na-unikniecie-upadlosci-4177716.html

 

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