Poland

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.

Poland’s prime minister said Tuesday he’s concerned that if given money now Ukraine would use it to pay the debts it owes to Russia rather than to initiate reforms as it seeks to build a new system of government, The Wall Street Journal Emerging Europe blog reported. “There’s concern the money that would be given to Ukraine now would go through it as a transit country. It would be ironic if Europe and the West helped only to see this money paying debts owed to Russia. Debts must be paid, of course, but this is not why we want to organize help for Ukraine,” Donald Tusk told reporters.

Poland will increase its budget gap for this year by nearly half, the government said yesterday, acknowledging the severity of the current slowdown in the economy so far among the most resilient to Europe's financial crisis, the Wall Street Journal reported yesterday. Finance Minister Jacek Rostowski said that the government would increase its budget deficit by some 1 percent of gross domestic product, an equivalent of some $15.6 billion. The increase will be a strongly stimulating impulse "that will help the economy get back on track in coming years," Rostowski said.

After German travel agency GTI Travel declared bankruptcy on Monday, its Polish unit has decided to suspend sales and declare insolvency, the Warsaw Business Journal reported. The Polish company has said it is looking for new flights for its clients as Sky Airlines, a member of the Kayi Group that also includes GTI Travel, has also gone bankrupt. Kayi Group, which is active mostly in Germany, the Netherlands and Russia, has been present in Poland since 1999.

A bankruptcy court on Monday approved Central European Distribution Corp's bankruptcy exit plan, putting Russian billionaire Roustam Tariko on the verge of adding one of the world's largest vodka producers to his stable of companies, Thomson Reuters News & Insight reported. Under the plan, green lighted in U.S. Bankruptcy Court in Wilmington, Tariko will receive all of the Polish company's newly issued stock in return for $277 million he is providing for the benefit of its creditors.

The Polish government will work to correct “a giant mistake” that is the country’s private pension system, introduced in 1999 and responsible for the bulk of Poland’s public debt, its finance minister said Tuesday, The Wall Street Journal Emerging Europe blog reported. The government in recent years has wrestled with privately managed pension fund companies, which receive a percentage of gross salaries and invest it in the capital market.

A unit of Russia's Alfa Group said on Thursday it had withdrawn its proposal to acquire Central European Distribution Corp, one of the world's largest vodka producers, through a restructuring of CEDC's finances. Alfa Group unit A1 said in a two-sentence statement to Reuters that it had officially withdrawn its non-binding offer to restructure CEDC. It also said the two other members of its consortium, CEDC investor Mark Kaufman and SPI Group, which owns Stolichnaya Vodka, had been informed of its decision.