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Polish ruling party demands banks explain price rises
January 26, 2016 / 5:36 PM / 2 years ago

Polish ruling party demands banks explain price rises

WARSAW, Jan 26 (Reuters) - Poland’s ruling party has summoned top bank executives to explain recent fee increases, warning that they could be acting illegally if they are passing on the cost of a planned tax.

The mostly foreign-owned banks are scheduled to appear next month before parliament’s public finances committee, marking an escalation of tensions with Poland’s new government.

“We would like to know why banks are introducing such sharp price increases,” Andrzej Jaworski, a ruling Law and Justice (PiS) party lawmaker, told private broadcaster TVN24 on Tuesday.

Several of Poland’s top lenders, including Poland’s biggest bank, state-run PKO BP, have announced plans to raise fees on mortgages, cards, loans, current accounts and ATM withdrawals in recent weeks, prompting analysts to predict an industry-wide shift away from near zero-fee services.

A bank tax due to come into effect next month is forecast to cost the sector, which includes the local units of Commerzbank , Citigroup, ING, and Raiffeisen , some 4.4 billion zlotys ($1.1 billion) a year, more than a third of its 2015 aggregated estimated net profit.

The plan is a central policy of Warsaw’s new conservative cabinet, which has promised more welfare and widely-shared prosperity at the expense of big corporations.

Banks including mBank, ING Slaski, Handlowy and Raiffeisen Polbank have recently decided to increase fees, but bankers say the moves were connected to earlier costs imposed on lenders such as several bank guarantee fund contributions, not the bank tax.

“I want to remind them that the bank tax law which has come into effect says that such practices are banned,” Jaworski said.

The Polish banking sector’s prices are generally lower than in Western Europe, especially in terms of card fees, which are the lowest on the continent at 0.2 and 0.3 percent. The margin on mortgages is an average 1.83 percent above the reference rate, while in the UK it is some 4.3 percent.

Record-low rates, credit card fee cuts and the costs of a guarantee fund led Polish banks to raise their prices last year after decades of almost zero-fee services. Bankers say privately a bank tax will lead to further fee hikes or job cuts.

“We have no choice, but to raise prices further,” said one banker, from a medium-sized bank, who declined to be named because of the sensitivity of the issue.

$1 = 4.1181 zlotys Additional reporting by Pawel Florkiewicz; Editing by Alexander Smith

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