Republic of Poland: Financial Sector Assessment Program-Technical Note-Stress Testing and Systemic Risk Analysis
IMF Staff Country Reports, May 9, 2019
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Bibliographic details
- Published: May 9, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498313155.002
Major findings
- Poland’s financial system is dominated by the banking sector, with significant state participation and foreign ownership.
- The banking system shows resiliency to adverse shocks in the aggregate; however, some other systemically important institutions (OSIIs) show weakness.
- The adverse retail event had a limited impact; the wholesale event affected some large banks in the system.
- Interbank analyses showed that any destabilization to affiliating banks could cause severe distress to the affiliated cooperative banks.
- Banks’ large holdings of sovereign bonds and the substantial presence of state-controlled banks create a significant sovereign-bank nexus in Poland.
Stress testing results and systemic risk analysis
- Aggregate solvency stress testing indicates overall resilience of the banking system.
- Some OSIIs exhibited vulnerabilities under the scenarios analyzed.
- Retail stress scenario: limited aggregate impact on the banking sector.
- Wholesale stress scenario: material effects on several large banks.
Interbank linkages and contagion
- Analyses of interbank exposures highlight that destabilization of affiliating banks can transmit severe distress to affiliated cooperative banks.
- The finding reinforces the need for authorities to address identified weaknesses in affiliating banks to limit contagion risk within the cooperative banking network.
Sovereign‑bank nexus
- Large bank holdings of sovereign bonds combined with a substantial presence of state-controlled banks produce a significant sovereign-bank nexus in Poland.
- The nexus creates potential feedback channels between sovereign stress and bank sector stress.
Policy recommendations
- To avoid incentives for banks to hold sovereign debt, the Financial Sector Assessment Program team recommends that the Financial Institution Asset Tax be redesigned on grounds of both financial stability and efficiency.
- Authorities should address identified weaknesses in affiliating banks to reduce contagion risk to affiliated cooperative banks.
Content in this bundle
- 1polea2019005