Joao Bras Jorge was a guest at the Banking Forum 2021
Joao Bras Jorge, CEO of Bank Millennium, was a guest at the debate “New strategic projects for Poland and the banking sector” during the Banking Forum 2021, an event held by the Polish Bank Association (ZBP). The panel was attended by: Paweł Borys, Prezes Zarządu Polskiego Funduszu Rozwoju, Radosław Kwiecień, Członek Zarządu Banku Gospodarstwa Krajowego, Iwona Duda, Prezes Zarządu Alior Bank , Janusz Władyczak, Prezes Zarządu KUKE i Bartosz Kublik, Prezes Zarządu Banku Spółdzielczego w Ostrowi Mazowieckiej.
Among the topics discussed during the debate were the directions and strategic projects recommended for Poland to focus on in order to facilitate the country’s successful recovery from the pandemic period. According to Joao Bras Jorge, the most important project today is the provision of support/financing to small and medium-sized enterprises. It is clear that the pandemic will be followed by a wave of infrastructural projects the execution of which will be crucial for the economy. Such projects may be financed by banks, prepared to provide support for their implementation. Of course, a major chunk of financial support will come from the European Union, which is very good news. However, it is extremely important not to overlook the need for the provision of support to companies, especially small and medium-sized enterprises. Businesses must return to operating at their peak production capacity. Accordingly, they will need to invest in the reconstruction of their production assets, thereby improving the production capacity through targeted capital expenditures in order to satisfy the demand and boost the supply. Also required is the digitization of services and trade and a ramp-up of the automation of industrial processes. These are extremely important issues.
It is worth pointing out that we have enormous opportunities in terms of increasing the volume of financing in the economy. The banking sector has an average of approximately PLN 1.5 trillion in deposits and PLN 1.2 trillion in loans, with GDP at a level of PLN 2.2 trillion, or even PLN 2.3 trillion. This corresponds to roughly 100% of the value of loans and deposits in relation to GDP. In turn, most of the euro area countries have already reached 200%. This means that we have an additional unused space for financing the economy that we may tap into, offering a lot of potential and centered around the provision of financing to companies. This is reflected in the relevant numbers. In Poland, mortgage loans account for 20% of GDP, whereas in the euro area the corresponding value is 40% of GDP. In turn, corporate loans in Poland account for 15% of GDP, whereas in the euro area they account for more than 40% of GDP, a ratio that is almost three times greater. So this is an important area where we should be active and which should not be overlooked.
Another area where there is still plenty to do is digitization. This is a priority issue in almost every sector, an area that requires substantial investments. However, besides mega-projects, we should never lose sight of the importance of small and medium-sized enterprises, which so far have received support from the PFR Shields or support from the banks in form of moratorium periods on their loans. On this support also guarantees from BGK was extremely important, especially the Minimis to micro business. This support from BGK is becoming more and more relevant and it should be extended for another year to enable these companies to resume their operations.
We should make sure that loans and other types of financing are available to medium-sized and small enterprises. This is the most important project in the context of ensuring growth for the Polish economy. And while we are at it, it is extremely important to find a solution to the Swiss franc loan problem. If the solution of the Swiss franc loans results in a cost for the banks of, say, PLN 100 billion, and the banks are forced to withdraw this amount from the market, there will be no capital available to support businesses financially. Meanwhile, this amount might be allocated, for example, to the provision of financing to small and medium-sized enterprises, which are the driving force of the economy.
Last Updated on March 19, 2021 by Karolina Ampulska