The financial supervisory authority in Poland is examining the increasing share of government bonds in banks' balance sheets as their involvement continues to grow.
Poland's financial supervisory authority has raised concerns regarding the growing percentage of government bonds held by commercial banks. With the value of state bonds in their portfolios expected to reach almost 700 billion PLN by the end of 2025, this marks a significant increase of approximately 164 billion PLN or 30% more than the previous year. This substantial rise calls into question the sustainability and risks associated with banks heavily investing in government debt.
As of now, government securities represent around 20% of the total assets in the banking sector, excluding state-guaranteed bonds, reflecting a marked increase from the previous year's figures that were notably lower than this threshold. This trend prompts the Polish Banking Association to advocate for a revision of the tax base for the banking tax, citing the necessity to mitigate risks posed by this rising concentration of public debt within banking portfolios.
The implications of these findings are critical as the reliance on government bonds could signal potential vulnerabilities within the banking system, especially if economic conditions shift. The discussion generated by these statistics underscores the need for regulatory oversight and the potential for policy changes to address the financial health and risk management strategies of banks in Poland, ensuring a balanced approach to public debt and banking stability.
