Quantcast
Poland prods banks to give savers higher interest rates amid soaring inflation – Metro US

Poland prods banks to give savers higher interest rates amid soaring inflation

FILE PHOTO: Poland’s Prime Minister Mateusz Morawiecki speaks during a
FILE PHOTO: Poland’s Prime Minister Mateusz Morawiecki speaks during a news conference near the gas installation at a Gaz-System gas compressor station in Rembelszczyzna

WARSAW (Reuters) -Poland will push banks to offer clients higher interest on their savings, its prime minister said on Tuesday, as soaring inflation and higher lending rates fuel a cost-of-living crisis in emerging Europe’s largest economy.

In a country where floating-rate mortgages are the norm, rising interest rates have severely squeezed the household budgets of many Poles while boosting bank profits.

Prime Minister Mateusz Morawiecki said financial institutions were not doing enough to share the benefits with savers.

“When there is increasing inflation and the central bank is raising interest rates, which leads to very high profits for financial institutions…, the inability to share these profits with a citizen – such behavior is unacceptable,” he told a news conference.

Asked how the government would go about getting banks to offer a higher rate of interest on deposits, Morawiecki said it would use “persuasion”, without elaborating.

In comments published after Morawiecki spoke, Leszek Skiba, chief executive of state-controlled lender Pekao, told news agency PAP that it would raise interest on deposits and announce details in the next few days.

Morawiecki spoke after the cabinet discussed proposals announced in April to help borrowers affected by rising rates, including payment holidays for eight months over a two-year period and access to help from funds that banks pay into.

He said that the total cost of the payment holidays to banks would be around 3 billion zlotys ($677.51 million).

A fund to support borrowers will be increased to around 2 billion zlotys in 2022 and 2023 from 600 million currently, he said.

The borrowers’ support fund, now in operation, will be available for three years, and the maximum monthly amount of aid is 2,000 zlotys.

Morawiecki reiterated that the WIBOR interbank rate, on which most Polish mortgages are based, would be replaced.

“If the banking sector does not work this out, we have a ready-made reserve solution – the Polonia rate,” Morawiecki said. “This means savings of 1 billion zlotys for Poles and this is a cost to be borne by banks.”

The WIG Banks stock index was up 0.2% at 1414 GMT on Tuesday.

($1 = 4.4280 zlotys)

(Reporting by Alan Charlish, Anna Koper, Pawel Florkiewicz; Editing by Mark Heinrich)

More from our Sister Sites