Agricultural Property Agency. At the end of 1992 nearly 1.7 thousand entities financed previously by BGŻ lost their creditworthiness and at the end of 1993, nearly 2 thousand of the bank s creditors did not have credit capacity. BGŻ s losses on account of the finan- cial difficulties of the entities which failed to repay their liabilities to the bank at the end of 1993 amounted to PLN 1.6 million. This situation required immediate restructuring actions in BGŻ and some BS.

Restructuring

In 1994 an act on restructuring of cooperative banks and Bank Gospodarki Żywnościowej and amendment of certain acts was adopted. The new regulations determined the direc- tions of the restructuring and assumed establishment of a 3-tier organizational structure of the cooperative banking sector in Poland. The basis of the 3-tier structure was made up of cooperative banks, obligated to be affiliated with a pertinent regional bank. The second level was made up of 9 regional banks operating in the form of joint-stock companies. The third level of the organizational structure of the cooperative banking sector was BGŻ. In accordance with the provisions of the act, BGŻ was given the function of a national bank providing activity for the affiliate banks and ensure consistency of activities of the regional associations, in particular: ensuring stability of the banking structure and payment liquidity to regional banks and cooperative banks affiliated with them, according to the principles laid down in the affiliation agreement, maintaining the current accounts and mandatory reserve accounts of the affiliated regional banks and conducting interbank settlements of these banks, according to the principles laid down in the affiliation agreement, making deposits on behalf of the national association and raising funds in domestic and foreign money markets, opening foreign branches of the national bank and effecting international financial operations, developing commercial activity of the association through determining the preferred banking products, advertising, marketing and economic analyses, developing banking procedures, IT systems and telecommunication network for the association, controlling the financial standing of the affiliate regional banks, remitting mandatory reserves for the affiliate regional banks to NBP, organizing a professional training system for the staff employed in affiliate regional banks and cooperative banks, representing the affiliate banks before Polish and international financial institutions, taking out refinancing loans from NBP in favor of affiliate banks 90.

90. Journal of Laws 1994, No. 80, Item 369. ABGŻ, file no. 1392, Historical background. Calendar of events., op. cit., p. 50-52.

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