Poland

Poland’s ruling party softened a tax on its financial industry which could have hurt its ability to finance the budget deficit, helping to rally government bonds today, Bloomberg News reported. Parliament’s public finance committee excluded banks’ roughly $41 billion in government- bond holdings from taxable assets “to prevent an increase in budget-financing costs,” Law & Justice lawmaker Wieslaw Janczyk, a deputy head of the committee.

The Polish president's economic advisor Zdzislaw Sokal told Reuters that the failure of SK bank which cost other lenders some 1.4 billion zlotys ($348.17 million) would not inflict any damage on the domestic banking sector. Sokal added that President Andrzej Duda was not ready yet to announce specific plans for legislation mandating a conversion of Swiss franc mortgages, one of his pre-election promises. Duda was elected in May. It was not clear yet, Sokal said, whether the conversion would be conducted at historical exchange rates, as this may be subject to discussion.

Coking coal producer JSW expects to reach an agreement with bondholders on a debt restructuring, the company's deputy head said on Friday, three days ahead of a deadline in the negotiations. State-controlled JSW is struggling to cope with record low coal prices and high mining costs and has had to cut costs. "Taking into account the talks up to now, both sides aim at an agreement and we assume that the agreement will be reached," Tomasz Gawlik told reporters at a news conference on the company's third-quarter results. He declined to give further details.

Poland's second-biggest power firm Tauron said on Thursday it has submitted an offer to buy assets owned by the troubled state-run Brzeszcze mine, Reuters reported. The already highly-indebted Tauron said it submitted the offer through a special purpose vehicle (SPV) in which it will ultimately hold a 40-percent stake. The rest of the SPV will be controlled by two other state-run entities. SRK, a state-owned coal mines restructuring company and the current Brzeszcze owner, has announced a public tender to sell the mine, meeting one of the conditions set by Tauron for it to submit an offer.

Poland's treasury ministry wants to transfer part of its stakes in gas group PGNiG, insurer PZU and utility PGE into state-run investment fund TF Silesia, an official agenda for a cabinet meeting on Monday showed. A treasury spokesman declined to comment on the reason for such a move. Local media, however, said the government wants to use TF Silesia, among other state entities, to rescue state-controlled Kompania Weglowa, the European Union's largest coal miner, which is on the brink of bankruptcy due to high costs and falling coal prices.

Poland is again trying to persuade power firms to take direct stakes in troubled coal company Kompania Weglowa as launching a fund to help the miner would take too long, Rzeczpospolita daily said on Wednesday. The Polish government is working hard to keep the European Union's biggest coal miner alive as its bankruptcy would leave thousands of potential voters without jobs ahead of a general election in October.

Poland has persuaded at least three major companies to contribute to a bailout of troubled coal miner Kompania Weglowa, despite some executives' misgivings about the commercial logic of getting involved, sources with knowledge of the matter said. After weeks of talks with more than a dozen firms it hoped would take part in the rescue, government officials have received proposals from three: copper miner KGHM, utility PGE and chemicals producer Grupa Azoty , the sources said. "Arms are being twisted," said a source close to one of the companies involved.

In a related story, the Financial Times reported that Poland’s banking sector is bracing itself for a $2.5bn hit as the fallout from the Swiss franc’s appreciation continues to hurt the country’s lenders. Seven of the country’s largest banks could see their combined pre-tax profit fall by more than a quarter, rating agency Moody’s said, under a government plan to force them to convert Swiss franc mortgages to Polish zloty.

Almost half of Poland’s credit unions are close to bankruptcy, as a collapse in the sector’s financial health strains the country’s banking bailout fund, the Financial Times reported. The industry is a primary source of funds for millions of poor and working-class people, mainly in rural areas and smaller cities. Of the 55 credit unions — known as SKOKs in Poland — that were operating 12 months ago, two have been declared bankrupt, two have been bought by banks in fire sales, and two have been forcibly merged.

Poland's financial regulator KNF is seeking court approval for ailing credit union SKOK Wolomin to be declared bankrupt, a step that would allow depositors to get their money back through the country's bank guarantee fund, Reuters reported. SKOK Wolomin has 2.3 billion zlotys ($684 million) of deposits covered by Poland's Banking Guarantee Fund. It is the latest Polish credit union to run into trouble in an industry which has come under fire for weak management and poor supervision in the past.