History of the Polish cooperative banking industry

Savings and lending cooperatives are a branch of the cooperative industry in Poland with the longest history. The Lending Society for Industrialists of the City of Poznań, established before 1861, is said to have been the first Polish savings and lending cooperative. The oldest cooperatives include the Lending Societies in Brodnica and Gołubie, established in 1862, which now operate as cooperative banks.

Despite various organizational forms and operating principles in individual partitions, all savings and lending cooperatives had a common goal: integration of efforts under principles of mutual assistance in fighting against usury and keeping assets in Polish hands at the same level. In addition to their economic operation, the savings and lending cooperatives carried out also educational activities whose aim was to protect the Polish national identity and counteracting its extermination.

The forerunners of the Polish savings and lending cooperatives on the partitioned Polish territories were Karol Marcinkowski, priests Augustyn Szamarzewski and Piotr Wawrzyniak (in Greater Poland, Prussian partition), Franciszek Stefczyk, Ph.D. (in the Austrian partition), and Edward Abramowski (in the Russian Partition).

In the Austrian partition various advance payment societies as well as savings and lending companies were established. They were small local institutions of the so called good loan, whose members were primarily farmers. Galician smallholders needed low-cost loans, and these could be provided only by relatively small cooperatives which relied on the voluntary work of their management, thus keeping costs at low level, and which applied simplified procedures for handling formalities. Raiffeisen type savings and lending companies, established since 1890, played the role of such unions. Their patron was a distinguished cooperative activist, Franciszek Stefczyk. The model of cooperative banks promoted by Franciszek Stefczyk was based on the theory and experience of F.W. Raiffeisen, but their implementation in the Galician country required a large number of adaptation efforts.

After the World War I, the Polish society faced a tough challenge of reconstructing the country and accelerating integration of individual regions that for almost 150 years had been under different political and economic regimes of partitioners. Banking cooperatives, disorganized after restoration of the independence, also participated in these processes. Throughout the entire interwar period cooperative activists worked to integrate the sector.

In the inter-war period, lending cooperatives witnessed phases of development and strong perturbations (especially during the Great Depression of the 1930s.). Simultaneously, a process of unification and formation of two types of savings and lending cooperatives took place at that time: universal people’s banks and Stefczyk farm unions. Both operated on the basis of uniform cooperative and banking law.  As in the 19th century, they acted for the benefit of local communities, constituting an important element of the local economies, conducting also social and educational, as well as cultural activities. Apart from Polish cooperatives, Jewish, German and Ukrainian cooperatives were organized on the basis of nationality.

Activity of the savings and lending cooperatives was disrupted by the outbreak of the World War II. They were liquidated in the territories incorporated into the German Reich and the USSR, while in the General Government the cooperatives were kept, though the scope of their activities was limited and the operation of self-government bodies was suspended. During the war, cooperative banking lost many employees and suffered considerable material losses.

In the period of People's Poland, the situation of cooperative banking sector was quite fluid. After several years of post-war reconstruction and restoration of structures, lending cooperatives were liquidated (1948-1951) and replaced by communal cooperative unions. After 1956, the lending cooperatives were reactivated in the form of savings and lending cooperatives. Their activity focused on small-size private enterprises and consisted primarily in granting loans to individual farmers, craftsmen and private entrepreneurs. Social, cultural and educational activities also played an important role.

Another important change took place after 1975, when the savings and lending cooperatives were transformed into cooperative banks and subordinated to Bank Gospodarki Żywnościowej (BGŻ). Cooperative banks took over all lending services provided to the rural population and agricultural producers, started to grant loans for the purchase of agricultural lands in private land transactions, and contributed to the development of monetary transactions in rural areas. Pursuant to the provisions of the banking law and the cooperative law of 1982, they were granted autonomy, and in terms of the scope of their activities were equated with other banks.

A new period in the history of cooperative banks was initiated by the systemic breakthrough that took place after 1989. Under the Act of 1990 on changes in the organization and activity of cooperatives, cooperative banks were granted full organizational autonomy, as the Bank Gospodarki Żywnościowej lost its function of the central cooperative association. Relationships with BGŻ were based on voluntary civil law agreements on mutual cooperation. On the basis of pre-war traditions, in the early 90s of the 20th century, cooperative banks established regional banks affiliating:  Gospodarczy Bank Wielkopolski SA in Poznań, Gospodarczy Bank Południowo-Zachodni SA in Wrocław, Bank Unii Gospodarczej SA in Warsaw. Along with BGŻ, they played a role of financial centers of cooperative banks, and the banks were obliged to join one of the structures in order to increase financial security. The Act on restructuring of cooperative banks and BGŻ of 1994 introduced three-tier structure of the cooperative banking sector. It consisted of: cooperative banks, regional banks (there were 9 of them) affiliating cooperative banks, and BGŻ as the national bank (it was transformed into a joint-stock company). Mutual relationships between cooperative banks and affiliating banks were regulated by civil law agreements. The act on bank restructuring contributed to an increased efficiency of the cooperative banking sector.

In 2001, a new Act on the cooperative banking entered into force. It introduced a two-tier structure (without the national bank) and imposed an obligation to affiliate on cooperative banks with own funds not exceeding EUR 5 million. The banks were free to choose the affiliating bank and had a possibility to change it. Ultimately, a structure was established by two affiliating banks: Bank Polskiej Spółdzielczości S.A. and Spółdzielcza Grupa Bankowa.