November 19, 2018 / 6:53 AM / 22 days ago

UPDATE 2-Polish regulators ready to shore up stability after bank share falls

(Adds details, shares)

By Agnieszka Barteczko

WARSAW, Nov 19 (Reuters) - Poland’s Financial Stability Committee sought to reassure nervous investors on Monday, saying that after discussing problems at Getin Noble Bank and Idea Bank it was confident the country’s banking system was stable.

Their shares fell sharply last week after financial regulator Marek Chrzanowski quit over corruption allegations by Polish billionaire Leszek Czarnecki, who controls both banks.

Prime Minister Mateusz Morawiecki demanded an investigation into reports that Chrzanowski, who denies any wrongdoing, had asked Getin Noble to hire a specific lawyer and pay him a salary equal to 1 percent of its market capitalisation in exchange for the regulator’s “support” for the troubled bank.

The scandal is seen as a blow to the ruling Law and Justice party (PiS) party, which took power in Poland in 2015, partly on a pledge to fight corruption.

“All the institutions the Financial Stability Committee consists of have confirmed that the financial system is stable,” the committee, which consists of representatives from the central bank, finance ministry, financial market regulator and banking guarantee fund, said in a statement.

The Financial Stability Committee will hold a news conference at 0830 GMT, while Czarnecki is expected to testify at the prosecutor’s office later on Monday.

The committee said that representatives Getin Noble and Idea Bank said at a meeting on Sunday that they had taken “appropriate actions” and continue to pay out clients funds.

The central bank also declared readiness to launch liquidity support so that the banks can provide service to their clients.

Shares in Czarnecki’s banks tumbled on the news last week, as did state-run banks amid uncertainties over Getin Noble, which has slumped by 80 percent compared to a 16-percent fall in the banking index since the start of the year.

The bank has a significant number of bad loans, some of them foreign-currency denominated. Czarnecki had promised to pump 1 billion zlotys into it this year and next.

Shares in Getin Noble Bank fell by a further 9 percent on Monday, while Idea Bank rose by 4 percent. (Reporting by Agnieszka Barteczko; Editing by Kim Coghill and Alexander Smith)

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