June 9, 2023


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MREL requirements. Banks have to borrow about PLN 20 billion

Debt securities have already been issued for part of this amount. However, banks are still short about 80 percent. required quantity. Under the current market conditions, it will be more difficult to achieve the goal. The cost will certainly be much higher than it was a month ago. Everyone hopes that the situation will calm down – says money.pl Łukasz Jańczak, Erste Securities analyst.

MREL requirements. Why is it so important?

Title deeds to MREL requirements (Polish translation: minimum requirements for own funds and eligible liabilities) They have to provide the banks with a safety cushion in case they face liquidity problems and threaten bankruptcy. Simply put, this is money for a rainy day. Doing excercise The goal is to shift the burden of bailing out failing financial institutions off the shoulders of the state, that is, all taxpayers, onto the shoulders of shareholders..

The rest of the article is under the video

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Community institutions exaggerated capital requirements on the basis of the 2008 financial crisis. Regulations in Polish law were implemented with a delay compared to other countries – and have been in force since 2018. Then the banks themselves delayed issuing capital bonds. It did not go unnoticed by Mikołaj Raczyński, an investment expert.

“Polish banks are postponing issuance of problems under MREL and now they will face the worst moment,” he wrote on Twitter.

The fund expects Polish banks to meet MREL requirements by the EU deadline, that is, by the end of 2023, in accordance with legal requirements, according to the BFG statement.

NBP looks at the hands of the banks

Attention was drawn to the problem by the President of the National Bank of Poland, prof. Adam Glabinski in a letter to the sector, which was read during the Banking Forum last week. The head of the central bank indicated that one of the main challenges was the need to meet the MREL requirements.

Nobody has any doubts about that. According to Michał Sobolewski, an analyst at Brokerage House of Bank Ochrony Środowiska (BOŚ), finding willing buyers for this type of debt security among institutional investors will be a challenge in the current market conditions. In an interview with money.pl, he explained that our bond market is very shallow, and we are also seeing an outflow of capital from bond funds, which is why Banks will have no choice but to approach foreign money with their offer.

Kamil Sobolewski, chief economist for Employers Poland, also pointed out this issue.

“There is a recession (2 consecutive quarters of GDP decline), but wages are +13.6% (consensus forecast +12%). Stagnant inflation. Troubled environment. Dependence of government finance and banking sector (MREL) on foreign markets. Enjoy today,” he tweeted. .

In fact, banks started with equity bonds in the open market at the beginning of this year, well before the earthquake in the global banking sector – they had already issued them within their own capital pools. PKO Bank Polski recently announced the sale of bonds worth about PLN 3.5 billion. This year, it plans more cases, perhaps it will carry out two issues worth about PLN 4.7 billion. Alior plans to collect 1 billion PLN this year, and Picau about 7 billion PLN.

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Banks are at the mercy of foreign investors

At this point, the market is frozen. We’ll see what happens in three months. I won’t worry about it in advance. In previous years, the regulator, seeing that no bank could issue bonds due to economic turmoil, postponed the deadline – DM BOŚ assesses.

The problem is, it won’t happen this year. We also contacted the BFG press office for comment. We asked if Polish banks are not able to meet the requirements of MREL within the given deadline and how does the BFG view this situation? He refused to answer our questions.

Karolina Wisota, money.pl journalist

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