Poland Detains Ex-Banking Regulator Chief on Corruption Charges

(Bloomberg) -- Marek Chrzanowski, the former head of Poland’s financial regulator, has been detained under corruption charges Tuesday.

  • This is the government’s next step in response to a bribe scandal that’s been rattling the country for the past two weeks as authorities seek to contain political damage and shore up confidence in the financial industry. “We’ve claimed from the start that we’ll be acting fast,” deputy Senate Speaker Adam Bielan told public radio Tuesday.

KEY INSIGHTS:

  • Chrzanowski, a protege of central bank Governor Adam Glapinski, is alleged to have offered favorable treatment to banks controlled by mogul Leszek Czarnecki in return for employing a recommended lawyer, according to a transcript of a conversation secretly recorded by the businessman. Chrzanowski resigned the day the newspaper report came out, while rejecting the accusations, including that he sought a $10 million bribe.
  • When the scandal broke, there was immediate concern that Getin Noble Bank SA and Idea Bank SA, lenders controlled by Czarnecki, may be in worse shape than expected, which quickly turned into risk that some customers may pull their deposits.
  • Czarnecki notified prosecutors about the alleged bribery and said the matter isn’t political.
  • Yet the scandal is dangerous for ruling Law & Justice, which likens itself to the voice of regular Poles. An opinion survey carried out after the scandal broke showed support for the ruling party dropping 5 percentage points to 33 percent, still 7 points ahead of the biggest opposition group.
  • Bank stocks have only partly recovered since the story broke after a risk of contagion from Getin and Idea sent Warsaw’s bank-stock index plunging most in more than two years. The central bank took steps to calm the situation and pledged to keep the system stable.

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