________________________________________________________ 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 authorities. 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 million. 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.