A bank protection scheme will be set up

The government is working on an amendment to the regulations concerning the banking sector. It envisages, among other things, the creation of a new protection system for banks.

This would involve setting up a special company to prevent bankruptcy of banks. Its aim would also be to improve the solvency of these institutions. It will also support forced restructuring, carried out by the Bank Guarantee Fund (BFG).

The establishment of such an entity is a result of a pandemic. It makes it difficult to foresee all threats to the stability of the financial system.

Banks participating in the system would contribute to it with an amount of at least 0.3% of the accumulated guaranteed funds. So if all banks joined the new protection system, it would have a capital of about PLN 3 billion.

But participation in the system is not mandatory. There are, however, two incentives. The first is the possibility of lowering contributions to the deposit guarantee scheme run by the BFG. Another incentive is the inclusion of expenses on such a system as tax deductible costs for banks.

In the opinion of the BFG, such a system is a modern way to protect the financial liquidity and solvency of participating entities. It works well in Western European countries. In Poland, the protection system (IPS – institutional protection scheme) has cooperative banks. It worked in the case of the forced restructuring of Bank Spółdzielczy in Przemków. In 2020, this bank was taken over by SGB-Bank, with the support of its IPS. No depositor of the acquired bank lost money.

Data from the Financial Supervision Commission show that as many as 22 banks had a loss at the end of November 2021. The total amounted to PLN 1.2 billion.

Source: https://finanse.gazetaprawna.pl/artykuly/8340930,system-ochrony-instytucjonalnej-banki.html