Cooperation of BGŻ with cooperative banks
On 13 April 1990, Bank Gospodarki Żywnościowej sent a letter to chairmen of supervisory boards and presidents of cooperative banks with a cooperation proposal which covered in particular: representing the interests of cooperative banks before NBP and other banks and administrative authorities, representing the interests of cooperative banks and conducting settlements, granting refinancing loans and placing BGŻ s funds in cooperative banks, calculating and remitting mandatory reserves to NBP, accepting voluntary deposits from cooperative banks, organizing and conducting settlements with the state budget on account of lending and savings activity, entering into bank consortia, preparing framework instructions and regulations for free use by cooperative banks 89.
By the end of 1991, out of the total number of 1,663 cooperative banks, only 102 did not decide to cooperate with BGŻ, which meant that 94.8% of all these banks remained affili- ated with BGŻ. The BS which did not undertake cooperation with BGŻ, mainly from the poznańskie, wałbrzyskie, legnickie and gorzowskie voivodships, still remained BGŻ share- holders and established 3 new affiliating banks, acting in the form of a joint-stock com- pany: Gospodarczy Bank Wielkopolski S.A. (GBW S.A.); Bank Unii Gospodarczej S.A. (BUG S.A.); Gospodarczy Bank Południowo Zachodni S.A. (GBPZ S.A.). BGŻ s possibility of influ- encing the activities of BS was very limited because these banks had far-reaching inde- pendence. The banking supervision over cooperative banks entrusted to BGŻ employees by NBP in 1990 lasted till April 1992. That is when amendments of the Banking Law Act were introduced - they removed the chapter defining the principles of operation of coop- erative-banking banks. From April 1992 the supervision over the activity of BS was taken over directly by NBP, through the employees of the bank s regional branches.
The bank s difficult situation
In 1992, BGŻ provided loans to nearly 5 thousand business entities with legal person- ality, including 2.7 thousand state-owned enterprises. Approx. 90% of the entities were associated with agriculture and agricultural and food industry. As a result of the situa- tion in Poland and the nature of its clients BGŻ found itself in a very difficult economic and financial situation. The level of overdue debt on account of unpaid loans and interest in 1992 in relation to the year before increased 137%, and the share of overdue debt in the total amount of BGŻ s receivables in 1992 increased by nearly 200% in relation to 1991. The problem of overdue debt was the most severe with regard to coopera- tives, food industry enterprises and PPGR that were not taken over by the State Treasury
89. Calendar of events., op. cit., p. 46.
148 T H E H I S T O R Y O F B G Z