Recordings for the record

SLD government in the first half of 2000s was sent under by the Rywin scandal. First PiS government was sent under by the arable-land corruption scandal leakage. The PO-PSL government began to fall apart after conversations of prominent politicians of the party, eavesdropped in a restaurant were published.

The joy of anti-PiSites that the unfolding KNF scandal with help overthrow the current PiS government is premature. Firstly, we still know too little about the story. Secondly, the government acts firmly and calmly (with some ludicrous exceptions) tackling the scandal (i.e. those who have no chance to be defended stand down, others where nothing can be proven at this stage, refute accusations). Thirdly, the circumstances of revealing  the scandal (why have they waited for more than half a year) and persons behind it (Leszek Czarnecki, not being crystal-clear businessman, nor his businesses and Roman Giertych, formerly a prime minister in first PiS government, since some five years, the chief barrister of the prominent no-PiS politicians) have all makings of a straightforward political game (this is it).

To assess political impact, find out what an average citizen who knows little about finance understands of it. An average Pole his little grasp of how banks are supervised, what the mechanism of bank bail-out is, why banks go to the wall, etc. They understand two basis threads: “fix up my crony with a job and pay 40 million and we’ll get off your back”. Voters have allergy with bribery and nepotism, the former being combatted by PiS, the latter being nurtured.

Commentators get outraged or excited by the notion of a bank being taken over for a single zloty. The world of finances has seen such transactions, such as Barings bank being taken over by ING for one pound, or Banco Popular being taken over by Banco Santander for one euro. Such deals were co-ordinated by central banks and regulators for the sake of financial stability. The difference is must be underlined is that all aforementioned banks bought for a single currency unit had gone insolvent on their own. In KNF scandal, PiS wanted to use financial supervision authorities to drive Czarnecki’s banks (not actually heathly, but not yet under water) to bankruptcy and nationalise them (in other instances private capital had to aid).

The very outbreak of the scandal has already taken its toll at Getin Bank and Idea Bank. Both institutions raised the pricing of deposits offered to clients, to around 200 basis points above interbank market rates. This indicates the banks struggle to stem the outflows of deposits (and remind on their webpages with capital letters that deposits are insured under Bank Guarantee Fund) and I would to be surprised to see a run on Getin and Idea. If this happens, deposit withdrawals can be suspended and Czarnecki might be forced to file for insolvency of his banking businesses. If he goes under water, the question is who else he drags down.