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The Warsaw Voice » Business » September 14, 2018
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Moody's on PPK
September 14, 2018   
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Poland's employee-sponsored pension plans PPK will be credit positive for Polish banks, rating agency Moody's said in a report, pointing to increased household's financial resilience and higher demand for bank's bond and equity issuances.
"The scheme is credit positive for Polish banks because it would increase pension savings among the Polish population, raising household borrowers' financial resilience and fueling household investment and advisory services needs," Moody's wrote. "The extra money held by the pension funds would also increase demand for banks' long-term bond or equity issuances."
"The growth of pension funds in Poland would increase demand for bank (and corporate) debt, particularly longer-term debt," the agency wrote. "Growth of a domestic investor base will reduce banks' need to issue foreign-currency debt in international markets, which exposes banks to currency risks."
Moody's points to PKO Bank Hipoteczny as a player which "could be a winner in this scenario," benefitting from a larger base of investors for its covered bonds.
Moreover, PPK could increase investor base for instruments the banks need to hold under Basel III rules.
"Additionally, in combination with pending amendments in bond legislation to allow for Additional Tier 1 issuance or the introduction of non-preferred senior bank debt, pension fund growth has the potential to enhance the domestic investor base for banks' higher-yielding Additional Tier 1 or Tier 2 instruments, which banks must hold under Basel III capital rules," Moody's said.
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