http://www.businesstoday.com/techpages/y2kpoles10271999.htm

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Poles join rush to withdraw savings to allay Millennium concern Bloomberg

Wednesday, October 27, 1999

Anna Wozniak, a 27-year-old Polish account manager, is worried a Year 2000 computer glitch will prevent her from accessing the zloty she saved at Wielkopolski Bank Kredytowy SA for a new car. So she's taking it all out now.

``I'm not going to bet my money to find out what can happen on Jan. 1,'' said Wozniak, who is saving to buy a car.

Wozniak is among a growing number of Poles who fear computer breakdowns on Jan. 1, 2000 will wipe out records of deposits at Polish banks or prevent quick withdrawals -- and are acting on those concerns now. Half of 4,000 Poles surveyed by Pentor SA, a Polish market researcher, expect banks' computers to malfunction at the turn of the millennium; one-third of those polled say they plan to withdraw all their savings before then.

Such anxieties have made cash more expensive worldwide as three-month borrowing overlaps the new year. In Poland, the spread between the three-month Warsaw Interbank Offered Rate and the rate at which banks borrow for one day has widened to 600 basis point from this year's average 50 basis points.

Analysts said the Polish banking industry is among the country's best-prepared for possible computer breakdowns on Jan. 1, 2000 associated with Y2K -- a potential problem in which software recognizes the two-digit shorthand '00 as 1900 instead of 2000. The risk, they say, lies in what the banks can't predict.

``We are uncertain how people will behave at the end of the year,'' Andrzej Powierza, an investment adviser at Wood & Co. in Warsaw, said in a report. If individuals rush to withdraw their savings, ``banks may face some liquidity problems.''

Global Impact

The concerns are global. In the U.S., the Federal Reserve has ordered printing an additional $50 billion in currency notes to have on hand in late December to satisfy the potential for enormous cash withdrawals from commercial banks.

Smaller banks in smaller countries such as Poland, with a population of 40 million, could see a significant impact on earnings.

``I wouldn't underestimate the liquidity problem,'' said Artur Szeski, a banking analyst at Pekao CDM Securities in Warsaw. ``The cost of cash emergency funds that banks will need to have can't be ignored. This will be reflected in earnings.''

Wozniak's bank, WBK, said it's been preparing for Jan. 1, 2000 for years and is convinced it's among the most prepared in Poland.

Pekao SA, Poland's largest bank with 3 million individual clients, and 30 percent of the total 172 billion zloty ($42.1 billion) deposited in Polish banks, is at the highest risk for withdrawals, analysts said.

Pekao has been preparing for Y2K since 1996 and says its systems are ready.

Still, banks may need to borrow on the interbank market to raise extra funds, which will become increasingly difficult as interest rates rise, analysts said.

`Alarming'

``Survey results are at least troubling, if not alarming,'' Pentor's report said. ``Clients may panic and this may be a serious threat for banks' liquidity.''

Pentor says only one in 10 people it surveyed was confident Polish banks are prepared for the Year 2000. More than half are afraid their money will disappear, or that there will be delays in cashing deposits and making transfers. The survey has a margin of error of 1.8 percent.

``We now watch deposits much closer than usual, and we may consider special offers for our clients, if there are signals they're needed,'' said Sebastian Luczak, Pekao's spokesman. ``The thing is even the most reasonable people can panic.''

Citibank Polska SA, the Polish subsidiary of the biggest U.S. financial-services company, already has special offers. It will pay every client that deposits 50,000 zloty in October for at least six months, along with the interest of 11.5 percent p.a., the annual subscription of a magazine of their choice. The bank said the offer is unrelated to millennium concerns.

Polish banks say they're prepared for the millennium and expect no unusual problems on Jan. 1, 2000. `Simply Impossible'

``It is simply impossible that we lose records of clients' money,'' said Krzysztof Pietraszkiewicz, president of the Polish Banking Association. ``A liquidity problem is a different question, but this is our job to manage liquidity and I can assure you banks will have enough cash.''

On Sept. 17 the Polish financial system went through a successful computer simulation of the date Dec. 31 and Jan. 1, according to the banking association.

Polish banks will accept their last transaction this year by 6 p.m. in Warsaw on Dec. 30. After that hour all banks will print account statements for every client they have and will close books for the year.

The banks may choose to operate or stay closed on New Year's Eve, but all transactions executed after 6 p.m. Thursday, won't be processed before Jan. 3, 2000. Every bank has backup power, heat supplies and communication systems, the association said.

Still, as the next millennium approaches, Wozniak, who travels regularly, said she wants to feel secure she can have her money whenever she wants it.

``My work schedule doesn't allow me to worry about my bank,'' Wozniak said. ``I simply don't have time.''

-- Homer Beanfang (Bats@inbellfry.com), October 27, 1999

Answers

We'll have to keep an eye on whether this remains isolated within Poland or starts spreading to other countries.

-- Dog Gone (layinglow@rollover.now), October 27, 1999.

Sounds from the figures that more Poles are GI than Americans are!!! Must be the difference in their not having our liberal-controlled media and our stupid PBS!

-- Elaine Seavey (Gods1sheep@aol.com), October 27, 1999.

P.S. Maybe after rollover the Polish can begin to tell some "stupid American" jokes...and they'll be right on target. LOL.

-- Elaine Seavey (Gods1sheep@aol.com), October 27, 1999.

Well kick me in the head and call me stupid.

Banks' job is to manage liquidity. If they borrow from interbank markets, the cost of borrowing will come out of their profitability AND drive up interest rates.

What happens if the interbank markets are down because of Y2K interuptions? Or because those that got won't put their money out for loann due greater than normal risks - Herstatt?

-- Bill P (porterwn@one.net), October 27, 1999.

In Europe the Poles are considered pretty money smart. Not really very motivated though, since virtually none of them have pulled thier cash out of the banks. Oh, they SAY they will. But they don't really think it through enough to recognize the shortness of the time, the size of the herd and the fiat of Government and Corporate who can, at the drop of a hat, simply refuse to allow them to withdraw cash.

But then I might be writting about ANY country in that description?

-- ..- (dit@dot.dash), October 27, 1999.

There was speculation some time ago about whether banks runs would start overseas or in USA. This still sounds like survey extrapolations -- they're not shutting 'em down yet over there ...

The more ya hear the more ya can see where this "Don't take your money out of the bank" banker's panic is coming from.

Expect more warm & fuzzy reassurances while they finalize their plans to limit cash, penalize cash-carriers, scan money, and totally forget that OUR money is OURS, earned by sweat & labor.

Thieves

-- Ashton & Leska in Cascadia (allaha@earthlink.net), October 27, 1999.

A&L

"Warm and fuzzy reassurances"

Actually these would continue to be welcome by me.

Unfortunately the last time I listened to Greenspan he was vehement in conveying his obvious annoyance with "those few that our stockpiling---i.e.---catalyst for creating all the problems.

I suspect preparers may soon become pariahs (sp) by TPTB.

-- D.B. (dciinc@aol.com), October 27, 1999.

Homer,

Thanks again, for this as well as your many other pertinent posts!

Jerry

-- Jerry B (skeptic76@erols.com), October 27, 1999.

Elaine,

Liberals, whether in the media or on PBS do not have a lock on Y2K happy talk. The republican controlled congress actually seems quite intent on pulling the wool over our eyes. Also, the banks are run by republican conservatives. Large companies are overwelmingly lead by republicans. These fine organizations have not exactly been sounding the alarms, you know.

Please do not try to poarize this issue into an us verses them / liberal verses conservative / democrats verses republicans / president verses congress fight. Y2K happy talk is endemic to our society at all levels from all income levels.

You are using a disinformation tactic that is unbecoming of God's number one sheep.

Sincerely,

-- Uhmm.. (jfcp81a@prodigy.com), October 27, 1999.

This definitely has the possibility of spilling over into other countries...eventually to the US. Consider Joe Sixpack sitting at home in front of the TV...when scenes of bank runs in Poland and adjacent countries come on the air. He may well decide to go down to the bank the next day and withdraw the $5,000 he's saved for the new boat...along with all of his friends. He then will be the subject of that night's news...and the panic spreads.

Near real-time global reporting is definitely a two-edged sword!

-- Mad Monk (madmonk@hawaiian.net), October 27, 1999.

Mad Monk,

Do you really think they would put bank runs in another country on CNN for all to see? Just like they told everyone Tuesday that they changed the DOW. When people got home Wednesday all they saw was the DOW up 90 points. The Game is rigged. SLAMMER

-- Slammer (BillSlammer@Yahoo.com), October 28, 1999.

Ummm...this was NOT an attempt at disinformation, as I'm sure you KNOW. It laid blaim at the door of the liberal media, where it belongs, and wasn't intended to polarize anything...many here have many times over said the same words I said.

And no, you are wrong again when YOU put words into my mouth and say that YOU imagine I think I am God's #1 sheep. I have NO #1 in there. If you know about suggested e-mail addys, you know they suggest a number in there. When I put the numeral 1 in there it didn't mean that I was #1. In fact, I intended JUST THE OPPOSITE, as my many friends and family will tell you: I was that one lost sheep going the wrong way when the Good Shepherd found me and brought me to where the other 99 were doing what they were supposed to be doing.

How about you...which way are you heading?

-- Elaine Seavey (Gods1sheep@aol.com), October 28, 1999.

Elaine,

I don't think the "blaim" lies *only* with the Military-Industrial Complex/Corporate controled media (and if you doubt my characterization, try following the money, hint: it ain't from liberals like me who make 22k per year, or from reporters who make 24, its from Westinghouse, GE, etc.).

Rather, it lies with the Democratic and Repubican controled federal government, and their cronies in big business, who feel compelled to p.r. the whole thing, ala Kosky (hint: he's not some liberal, he is a big corporation guy). The fact that the corporate media is spouting the corporate take on y2k is hardly a shock.

The mere fact that their reporters, who I realize are, as individuals, liberal-dominated doesn't change the facts. In other words, I know they're liberals as individuals, for the majority, but they are only intellectual prosititutes. At the very *least* we ought to place as much, if not more, if we have any sense, at the feet of their pimps, and of their clients.

Get a damned clue!

sean

-- Sean (stinkin@liberal.com), October 28, 1999.