March 4, 2016 / 2:53 PM / 4 years ago

Polish banks preparing for job cuts in the face of higher costs

* Polish banks under pressure as profits fall

* Some bankers say thousands in the sector may lose jobs

* Bank tax cited as one of the biggest job killers

By Marcin Goclowski

WARSAW, March 4 (Reuters) - Poland’s banks, which employ around 170,000 people, are planning their first major job cuts in a decade as a result of tumbling profits and government plans to saddle the sector with extra costs, bankers and analysts say.

Overall the listed banking sector lost a quarter of its stock market value last year, hurt by record low interest rates. There are also concerns now over the incoming conservative government’s new tax on their assets and plans to force the conversion into zlotys of the many Swiss franc-denominated mortgages which have become expensive for home owners since the franc’s ascent in recent years.

Speaking on condition of anonymity, executives from 10 different banks all said that lower profits were likely to cause substantial layoffs, amid expectations that the bank tax alone will drain 4.4 billion zlotys ($1 billion) a year from the sector. Some said they have already calculated the number of jobs they will have to cut this year.

Two of the banks declined to comment, one said it had recently cut its headcount by 15 percent and did not plan to make further cuts, while four said they had no plans for cuts. No one could be reached for comment at the three other banks.

Last year GE Electric’s BPH said it would cut its workforce by up to 1,706 people or 32 percent of the workforce, while Poland’s biggest bank PKO BP decided to let go 800 people or 3 percent.

Last week, Getin Noble Bank, owned by a Polish billionaire, said it would lay off up to 15 percent of personel by the end of 2016, citing the bank tax, low rates and other factors.

“The recent costs imposed on banks, plus the bank tax will lead banks to fire 5 to 8 percent of their people by the end of 2017,” deputy head of bank lobby ZBP Mieczyslaw Groszek told Reuters.

One banking source said layoffs could amount to 20 percent of the roughly 170,000 employed in the sector.

“Generally, in banks with weaker capital personnel reductions will reach 10-20 percent,” the source said.

“Layoffs haven’t gained momentum yet. Human resources departments have only just started to calculate the potential scale of cuts but Excel sheets are being fired up,” he said.

MOUNTING COSTS

Other than the bank tax which went into effect last month, banks are also expecting to bear the cost of converting Swiss franc mortgages, another campaign promise of the conservative Law and Justice (PiS) which won a parliamentary election last year.

PiS has built its economic platform around the promise of more economic equality and welfare hikes at the expense of large corporations.

Details of the Swiss franc conversion rules are not certain yet. A proposal by President Andrzej Duda, a PiS ally, could collectively cost the banks up to 60 billion zlotys ($15 billion) but observers say the final version may be watered down before it becomes law.

But concerns over the state of the banking sector - until recently seen as a pillar of Poland’s healthy economic growth - have also caused regulators to increase mandatory contributions to the bank guarantee fund by 600-700 million zlotys last year, boosting costs further.

Around 60 percent of Poland’s banking sector is owned by foreign groups such as UniCredit, Santander, Commerzbank, Raiffeisen and BCP. ($1 = 3.9407 zlotys) (Additional reporting by Adrian Krajewski; Editing by Greg Mahlich)

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