A new law that allows Polish citizens to deposit their savings outside of Poland and invest in foreign securities could financially stress local banks and brokerage houses, Warsaw-based analysts said last week.
Polish law restricts citizens residing in Poland from depositing capital and making investments outside the country. But in its effort to comply with European Union regulations, a section of the foreign exchange law - on its way through Parliament - ends those restrictions.
For Poles, that means the door will open to the international financial community of banks and brokerages.
The law is expected to take effect as early as October.
"There will be a higher level of competition from foreign banks," said Robert Sobieraj, an analyst at Bank Handlowy. "Foreign banks might offer more sophisticated programs."
However, analysts said there would be little immediate effect once the law passes.
The new law has the potential to exacerbate the local trend toward decreasing savings account deposits, said Artur Szeski, an analyst at CDM Pekao. He said that from Dec. 31, 2001 to March 31 of this year there was a 2% increase in the amount of cash held in Polish banks. For the same period a year ago, Poles increased their savings by 5.2%.
"It would have an impact because deposits have decreased," he said. "Part of these deposits could float out of Poland."
Analysts were unwilling to quantify just how large a strain this could have on the accounts since too many variables are involved.
Szeski said that one particular portion of existing deposits may be the most vulnerable to the law. Eighteen percent of private deposits, as opposed to those owned by Polish corporations, are held in foreign currencies - mostly in dollars and euros. Financially savvy Poles would be more likely to export that capital than deposits held in złotys, he said.
Brokers too should beware. Besides simply shifting their savings accounts, the law will allow Polish citizens to invest more creatively. Brokers could be hit negatively, analysts said.
"Clients may want to buy foreign shares," Sobieraj said. "I can't buy U.S. bonds now."
The return on Polish treasuries is better than in many other countries, but he said that could change. If it does, investing abroad would be more attractive.
Analysts said that once the law was passed, investors would be able to better diversify their investments. It is not likely the effects of this law would be earth shattering, though.
"Not everyone will be willing to transfer money abroad," Szeski said. "It won't happen overnight."
- Staff report
