October 17, 2016 / 6:00 AM / 3 years ago

Polish c.bank should regulate entire financial sector - supervisor

WARSAW, Oct 17 (Reuters) - Poland’s central bank should supervise the entire financial sector and such a transfer might take place in the next one or two years, newly appointed head of the financial supervisor KNF Marek Chrzanowski has said.

Chrzanowski also said the process of increasing domestic ownership in the Polish banking sector, known in Warsaw as “re-polonisation”, was a positive phenomenon as it would make Polish banks less vulnerable to external shocks.

Chrzanowski spoke with reporters last Thursday in remarks authorised for release on Monday morning.

“I personally think that the most reasonable solution, which has been implemented in many European Union countries, is to transfer supervision over all of the financial sector to the central bank,” Chrzanowski said.

He was appointed head of the Polish Financial Supervision Authority (KNF) earlier in October after he quit the central bank’s interest-rate setting panel.

Chrzanowski’s comments echoed those of the central bank governor Adam Glapinski, who called earlier this year for transferring the responsibility for regulating banks to the central bank.

Both Glapinski and Chrzanowski have been appointed to their current posts by representatives of the ruling eurosceptic Law and Justice (PiS) party, which won last year’s election against the previous centrist government.

PiS wants to increase state control over the domestic banking system, of which about 60 percent is currently owned by foreign banking groups.

During the weekend, the state-run insurer PZU said it was in talks to buy Poland’s second largest bank, Bank Pekao, from Italy’s Unicredit. Bank Pekao’s assets account for 10 percent of the sector’s total.

“More domestic capital (in the baking sector) means decisions regarding risk exposure are taken domestically, so the banking sector transmits external shocks to the Polish economy to a smaller extent,” Chrzanowski said.

Chrzanowski said the Polish financial sector was “stable and safe”, with only foreign currency-denominated loans being an issue.

The head of KNF said he hoped lawmakers would adjust a bill on solving the problem of Swiss franc mortgages in line with suggestions from the central bank.

Chrzanowski said doing so should reduce the cost of the bill for banks by about 4 billion zlotys ($1.05 billion) from 9.3 billion zlotys estimated earlier by the supervisor. The bill is to be debated in parliament later this week. ($1 = 3.8193 zlotys) (Reporting by Pawel Sobczak; Writing by Marcin Goettig; Editing by Tom Heneghan)

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