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Polish government loosens consumer credit regulations to boost struggling economy

Andrzej Jakubiak

Andrzej Jakubiak

As part of an effort to reinvigorate the economy, the Polish Financial Supervision Authority — or KNF — recently decided to ease regulations governing consumer loans.

Despite opposition from KNF head Andrzej Jakubiak and his two lieutenants, the KNF board went ahead with the changes, which included easier credit scoring for all banks and allowing for larger loans than called for in the original proposal, according to The Financial Times.

“The three internal members, including [the KNF head], felt that the changes did not serve the sound and prudent management of the banks,” Lukasz Dajnowicz, a KNF spokesman, said, The Financial Times reports.

The Polish economy grew only two percent last year and continues its decline each quarter, prompting the government to put cash back into consumers’ hands. Consumer spending has fallen into the negative, but exports have managed to keep the economy afloat and out of a recession.

Increased regulation and a struggling economy have discouraged banks from lending. Consumer loan balances, as of the end of December, decreased by 5.2 percent, or $38.9 billion, since December 2011. The mortgage market also faces similar problems after new mortgage loans fell 15 percent last year from 2011 to the lowest level since 2009, according to The Financial Times.

JPMorgan Cazenove, a U.K.-based investment bank subsidiary of JPMorgan Chase & Co., said that loosening regulations could be beneficial to the banking industry, as well as the overall economy.

“We believe the new regulation is timely given the recent deterioration in private demand and that it may revive the Polish consumer by giving more liberalized access to unsecured credit,” the bank said, The Financial Times reports. “In particular, we would see this as a positive catalyst for banks with relatively high share of consumer credit like Alior Bank, PKO BP or Getin Noble Bank…Overall, we would see these changes as a positive catalyst for Polish banks, supporting our view of a 2014 earnings rebound.”

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