Poland may draw as much as 10b euros from ECB

WARSA (Bloomberg) -- The National Bank of Poland secured a facility to borrow as much as 10 billion euros (12.6 billion dollars) from the European Central Bank to provide euro liquidity for the nation’s lenders.

Poland, which aims to adopt the euro in 2012, is the second east European country after Hungary to receive ECB support as risk aversion strained liquidity on the inter-bank market because of concern the region’s biggest economy would be afflicted.

“The agreement signed on Nov. 6 regards repo operations and a loan of up to 10 billion euros as additional support for NBP operations,” the Warsaw-based central bank said in a statement on it Web Site.

The zloty briefly advanced on the central bank’s announcement before weakening to 3.8575 against the euro at in Warsaw. Poland’s three-month WIBOR inter-bank rate fell 1 basis point to 6.71 percent Saturday, compared with 6.76 percent a week ago and a four-year high of 6.87 percent on Oct. 24.

“Limited liquidity in foreign currencies across central European money markets has been one of the most important issues standing behind the recent currency weakness,” Bartosz Pawlowski, a strategist at TD Securities in London, wrote in a client note. “The move should support the Polish market.”

At the beginning of this week, the Warsaw-based central bank started participating in weekly franc-euro swap operations with the Swiss central bank. It buys francs from its Swiss counterpart and then offers them to Polish commercial banks in exchange for zloty.

Swiss francs are popular in Poland for mortgage loans because of the interest-rate differential. The Polish central bank’s main rate is 6 percent, compared with the Swiss benchmark of 1 percent.

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