Poland: Financial Co-operatives (1993)


      This document has been made available in electronic
     format by the International Co-operative Alliance ICA     

                     FINANCIAL CO-OPERATIVES

Source : Tadeusz Kowalak:  Co-operatives in Eastern and
Central Europe, Poland; Studies & Reports, Twenty-first in
series; ICA, Geneva, 1993, 58pp., price 12 Swiss Francs

Co-operative Banks

Until the mid-eighties co-operatives were banned from
operating on the financial market.  Agricultural banks were an
exception, but even these had very limited independence.  They
transferred 60 - 70% of deposits to a central body, the Bank
of Food Economy (BGZ), with the remaining 30 - 40% available
for loans to members.  Following the law of 20 January 1990,
the BGZ lost its competence as sui generis central
co-operative union, but it continues to exist as a central
bank for rural banks.

There are 1,660 banking co-operatives with 459 branches and
2,693 cashiers' offices throughout the country.  Co-operative
banks have 2.5 million members, mainly farmers and small-scale
producers of commodities and services, and employ 32,000
persons.  Co-operative banks collected 18.5% of the
population's total savings in 1988.  They grant short- and
medium-term credit for production and consumer needs.  The
structure of loans granted in 1988 indicates that the main
task of these co-operatives was to promote agricultural
production (67.3% of the total credit granted).  In 1988 only
14.9% of loans were granted to handicraft and small private
trade and industrial enterprises, 15.4% for housing and only
2.2% for consumption needs. In 1990 the rural banks started to
form regional unions.  The first was created by 9 co-operative
banks in the region of Greater Poland, which has a strong
tradition of co-operative financial institutions.  The
Economic Bank of Greater Poland, taking advantage of financial
and institutional help from the French Credit Mutuel has
quickly developed into a viable alternative to the former apex
body, BGZ.

In April, 1991, 130 co-operative banks in 5 regional unions
set up the National Co-operative Bank Union (KZBS) with
headquarters in Poznan.  KZBS organizes funding to support its
members' credit facilities, provides training of personnel and
represents the interests of its members in negotiations with
the central

In 1990, under the auspices of the Independent Autonomous
Trade Union of Individual Farmers "Solidarnosc" - a
joint-stock company, the Bank Unia Gospodarcza (Economic Union
Bank) was created by about 100 co-operative banks.  In June
1992 117 co-operative banks were affiliated.  These owned all
its shares.

The majority of existing primary co-operative banks did not
cut their economic connections with their former central
union.  On the other hand the idea of establishing a national
union of bank co-operatives is promoted by the World Bank
mission and seems to be in the final stage of discussion. 
Because of controversial interests and ambitions of the
institutions involved, it is difficult to predict the final
result of these discussions.

After the liquidation of the central co-operative unions two
banks were formed out of their assets: "Spolem" for consumer
societies (in December 1990) and "Samopomoc Chlopska" for
agricultural co-operatives.

The inspiration and help of the French Caisse Centrale de
Credit Cooperatif assisted the creation of the Bank of
Socio-Economic Initiatives (BISE).  The Bank registered in
March 1990 and became operational in July of the same year. 
After two years of operation it is recognized as being one of
the most dynamic and successful financial institutions in
Poland.  Since its creation, the BISE has granted 462 loans,
with a total value of 95,059 million zlotys.  Almost all of
these were granted for investment purposes and more than 2,000
new jobs were created.  

The BISE works closely with two sister institutions: the
Foundation for Socio-Economic Initiatives (FISE) and the
Society for Socio-Economic Investment (TISE).  The FISE's
objective is to provide financial advice to small- and
medium-sized enterprises and to assist societies in obtaining
credit.  The TISE supports the development of small and medium
enterprises by contributing to their initial capital.

The TISE invests its funds into carefully chosen enterprises,
the main criterium being economic viability and relevance to
the local economy. The BISE offers a large choice of services
to foreign investors: legal advice, consultation,
representation etc.

Credit unions

Credit unions were reintroduced to Poland in 1989, through the
initiative of the trade union NSZZ "Solidarnosc" leaders.  The
Foundation for Polish Credit Unions was established in August
1990, with technical help from World Council of Credit Unions. 
The Foundation works by transforming the loan and savings
associations present in every enterprise into credit unions. 
Ten societies have been registered during 1991/1992 and the
first credit union started operation on 30 July 1992.  The new
movement represents 23,000 members and savings amount to US$
3,500,000.  The Foundation is also becoming active in the
insurance sector.

Co-operative insurance societies

Under communist rule, the insurance sector was the monopoly of
the State.  In 1987, the Government authorised the formation
of co-operative insurance societies and later joint-stock
companies. Foreign companies can form joint ventures with
Polish societies but are not yet allowed to operate directly
on the domestic market.  However, the sector is in full
expansion, with new companies appearing daily.  The minimum
capital requirement for starting an insurance company is US$ 2

Szczecin has seen the birth of Filar AG, joint-stock insurance
company of housing co-operatives.  The share capital is PLZ
6.6 billion, and operation is scheduled to start by the end of
1992. The company will be catering for the insurance needs of
housing societies and their members.

Benefit Sa, Gdynia, is a joint venture life insurance company
founded in 1992 by the Foundation of Polish Credit Unions,
CUNA Mutual Insurance Society (USA) and CUMIS Insurance
Society (Canada).  The share capital is US$ 1 million, of
which the Foundation has a 10% initial holding, with an option
to use its yearly surpluses to buy the remainder in stages. 
The company will offer loan protection and life savings
insurance to the members of credit unions.

EURESA, a consortium formed by Macif of France, Unipol of
Italy, PS of Belgium, Folksam of Sweden is at the source of
one of the most promising insurance projects.  Towarzystwo
Ubezpieczen Wzajemnych (TUW) is a mutual insurance company
registered in 1991, which became operational in March 1992. 
Its share capital is PLZ 5.7 billion, half owned by EURESA and
half by institutional members from Poland.  TUW offers the
same range of products as the State company PZU.

Besides the bank "Samopomoc Chlopska" an insurance society was
created on the basis of former Central Union of Agricultural
Co-operatives in 1991. The society has a premium income of PLZ
120 billion. The company offers general insurance to
agricultural co-operatives, providing about 90% of
agricultural societies with theft, fire, transport and vehicle
insurance services.