Gov't guarantees old PKO BP loans, raising bank's value

The government agreed to guarantee the old housing loans, paving the way for privatization of one of the largest Polish banks, PKO BP S.A. The government draft now must be approved by Sejm. The loans had been granted by banks, mostly PKO BP, to housing cooperatives up until 1992. Now they are being repaid by tenants, but according to terms set out by the government and Sejm. PKO BP president Henryka Pieronkiewicz said the old loan portfolio, worth about zl. 4 billion, is a major burden for the bank and without it PKO BP would have a much better financial result, because it would not have to create reserves for loans from the portfolio. According to Gazeta Wyborcza, if supervisory authorities allowed PKO BP to dissolve the reserves, the bank's gross financial result would improve by zl. 400 million. Pieronkiewicz added that the guarantee will also increase the bank's value, with the work on a privatization strategy "in advanced stages." (Gazeta Wyborcza, page 21)