Abstract
Bank consolidation is a process that has been observed in the world economy since the early 1980s. Until the global financial crisis formation of bank capital groups and financial conglomerates was considered as banks’ response to the globalization of financial system. After the global financial crisis, a “consolidation window” opened up in the global economy, which did not bypass the Polish banking sector. At the same time, it coincided with the support of the Polish government interested in its repolonization, which in a consequence resulted in an increase of the concentration level of bank capital. The main aim of the paper is the analysis of consolidation processes after the global financial crisis, as well as interactions between concentration of commercial banks in Poland (as a quantitative approach to the consolidation process) and their operational efficiency. The research indicates that concentration of the Polish banking sector affects effectiveness of the sector and individual commercial banks. However, scale and strength of these dependencies varies between the analyzed cases.
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Notes
- 1.
The subject of controversy has become not only scale of this support, but also its legitimacy, impact on public budget balance as well as their use by the financial institutions.
- 2.
In the case of the HHI in Poland, its value should be considered as low compared to the European countries. Only the most developed financial markets, such as Germany, Luxembourg, Italy, and the United Kingdom, were characterized by a lower value.
- 3.
This may be due to the fact that in the aftermath of the global financial crisis, the quality of banks’ loan portfolios has significantly deteriorated in most CEE countries. This forced a need to take over smaller and weaker institutions on the banking market and thus contributed to an increase of the banking sector concentration ratio.
- 4.
The deterioration of main effectiveness indicators in 2015 and 2016, including an increase of cost/ıncome ratio, lowering ROA and ROE indicators resulted from an increase of operating costs, which were related, among others, from the implemented tax on certain financial institutions (the so-called banking tax). This tax included commercial banks. In addition to the banking tax, the financial results of the banking sector in Poland were also affected by liabilities to the Bank Guarantee Fund and contributions to the Borrowers Support Fund (FWK), which value was determined by the amount of unsupported housing loans in a bank’s portfolio (capital from the Fund is used as repayable aid for people having problems with mortgage loans). FWK contributions were paid in February 2016; however, most banks recorded the related expenses in December 2015. The one-off event, which was the sale of Visa Europe shares, had a positive impact on the financial result of the banking sector in 2016, when Polish banks earned about 2 bln PLN (Pyka 2017).
- 5.
At the moment of the research, there is no access to the commercial banks’ results for 2018, as it was possible in the sectoral analysis.
- 6.
PKO BP assets increased from 199.2 bln PLN in 2013 to 248.7 bln PLN in 2014.
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Pyka, I., Nocoń, A., Pyka, A. (2021). Interactions Between Effectiveness and Consolidation of Commercial Banks in the Polish Banking Sector. In: Bilgin, M.H., Danis, H., Demir, E., Vale, S. (eds) Eurasian Economic Perspectives. Eurasian Studies in Business and Economics, vol 16/1. Springer, Cham. https://doi.org/10.1007/978-3-030-63149-9_4
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