(Corrects description of the EBRD in 9th paragraph)
WARSAW, April 27 (Reuters) - The European Bank for Reconstruction and Development (EBRD) plans to invest up to 700 million euros ($800 million) in Poland this year, including a project to help the Warsaw bourse return to growth, the EBRD local chief said.
GPW had surpassed its Vienna rival to become central and Eastern Europe’s largest equity market. But its overall market capitalisation has shrunk 26 percent year-on-year to 1 trillion zlotys ($260 billion) by end-March.
Banks and utilities, the two largest Warsaw-listed sectors, have been hit by the conservative government’s bank asset tax and the cabinet’s insistence on making state-run power producers help out Poland’s loss-making coal miners.
“We are deeply concerned about further growth of the capital market in Poland, as it is vital to the economy,” EBRD’s Polish director Grzegorz Zielinski told Reuters.
“We would very much like to support reversing the negative trend,” he said.
The Warsaw stock exchange is state-controlled. While Vienna and Budapest stock indexes have risen 6.5 and 77 percent, respectively, since the start of 2015, Warsaw’s main WIG20 has lost 17 percent.
The banking sector now faces a potential bill for converting Swiss-franc mortgages into zlotys. Current proposals could cost lenders 67 billion zlotys, a solution that EBRD’s Zielinski says will curb lending and hurt the economy.
“The most proper solution would be to divide the conversion costs between banks and loan holders, as well as the state,” he said.
The EBRD was set up to help the countries of the former Soviet bloc make the transition to market economies.
It has invested almost 8 billion euros in Poland in more than 365 projects, including buying corporate debt in Cyfrowy Polsat or Bank Millennium, and lending to GPW.
“We’ve already signed deals worth around 200 million euros this year,” Zielinski said. “For the whole year we’d like to engage in projects worth 600-700 million euros.” ($1 = 0.8836 euros) ($1 = 3.8874 zlotys) (Writing by Adrian Krajewski; Editing by Ruth Pitchford)
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