Honesty is the best policy
Rev. Msgr Ireneusz Skubis talks to Grzegorz Bierecki, the President of the National Association of Cooperative Savings and Credit Unions (SKOK in Polish).
Rev. Msgr Ireneusz Skubis: – We are in the situation of economic crisis. Many financial institutions have experienced it. However, some have managed to do well. And so did SKOK. Have you got any special anti-crisis solution?
Grzegorz Bierecki: – When one looks at the financial crisis in the world markets one must say that the source of this crisis is really something what should be called a deficit of decency. This is a special kind of deficit that occurred within several dozen years and which especially concerned financial institutions. Since the source of this crisis is loans given by financial institutions that were fully aware that they would not be paid or would be paid with great difficulty. In some sense, we had to do with the situation of irresponsible loans, when only the profits of financial institutions and not the good of people who used the loans mattered. The money was given to borrowers with the wrong intention, based on indecent reasons, actually with full awareness of doing evil. This evil returned to these financial institutions and led to their bankruptcy. The National Association of Cooperative Savings and Credit Unions has always meant good of their members. We did not offer any services that would harm our members – our owners since our members are the only owners of these credit unions. The money that members borrow and the money the other members deposit are to help people: help them become rich, create jobs, do something good. And this is the aim of our activities. The SKOK agencies are not institutions that aim at profits. Our rules define that the credit unions are not earning money organisations. That’s why gaining profits through the activities of SKOK is not the criterion we follow. The credit unions have been created to serve their members. A balance surplus must be achieved only to the extent to serve increasing the capital of the credit unions so that they can work safely and not to constantly multiply profits for the good of the small group of owners. The good condition of SKOK now, at the moment of crisis, actually results from the unique structure of SKOK and the philosophy of the activities: the credit unions only serve their members and are not profit-oriented organisations.
– You show us certain normality, which is expressed by the saying ‘honesty is the best policy.’ But if there is some wheeling and dealing, problems begin. Therefore, honesty is the essence of this matter to a large extent. SKOK acts as cooperative savings and credit unions for the good of millions of people. They are in 97 countries. Do they face a strong lobbing of the commercial institutions, which try to minimise their meaning using various methods and influencing their development?
– The credit unions have almost 200 million members in 97 countries. There are over 54,000 cooperative savings and credit unions in the world. Because of the supportive character and non-earning aim of their activities they are always attacked by commercial companies, banks, which expect profits from their activities. This is a natural contradiction and natural conflict, which occurs between supportive organisations and commercial organisations in the market. It is known that commercial institutions are interested in limiting the activities of SKOK, decreasing the range of their activities so that the earning-oriented institutions could have profits from the whole financial market freely. In Poland over 2 million households are customers of SKOK, the potential of which constitutes almost 1,800 agencies in our country. Therefore, there is a possibility to gain new groups of people, i.e. the credit unions can gain a better position in the market. And this is the reason why the SKOK agencies are attacked because commercial institutions must limit their appetites, their desire to multiply profits because of the offers of the credit unions and their popularity. One can say that the presence of the SKOK agencies as meaningful players on the market of financial services makes commercial institutions have less freedom to shape their excessively high charges or excessive interest rates. They must refer to the offers of SKOK since there is the risk that their customers leave them and go to the SKOK agencies. That’s why the bank lobby in Poland decided that the competitive potential of SKOK should be limited by using legal regulations. Thus the banks would be free to use high charges and interest rates. Of course, we hope that this plan will fail and the SKOK agencies can develop freely, continuing their activities for the good of hundred of thousands of households in Poland.
– Certainly, it would be a big harm for people who want to reach some stability through honest work and thrift. Many people think that one of the greatest achievements of Poland after 1989 was the development of the SKOK agencies. Please tell us. You started from nought, without any state help, and you have grown to be powerful institutions that so many Poles need. What do you as the founder of the National Association of Cooperative Savings And Credit Unions regard as the most important thing for the functioning of the unions looking at them from the perspective of several years?
– I want to remind you that before the war one third of people’s deposits were in Stefczyk’s SKOK. Therefore, when the possibility occurred in 1989 we restored SKOK. Polish people gathered in various places and taking social actions showed that they could build big financial institutions, which could meet the needs of local environments excellently and in the case of some SKOK agencies they can conduct their activities all over Poland. Every year during the general assemblies I inform about the successes of the credit unions. We measure this success in a very simple way, somewhat different than banks. During the general assemblies the presidents of banks inform their shareholders about the profits the banks gained from their activities. We inform how much money our members have saved in the budgets of their households because of saving in SKOK, i.e. having better interest rates on their savings than in commercial banks and also lower interest rates on their loans than in our competitions. We calculate these sums referring to the average prices offered by banks. Every year they amount to several hundred million zloty, which remain in the hands of our members and which they can freely use in their family budgets. Since the aim of SKOK is to improve the financial conditions of their members, the owners of the credit unions. The more money our members have the better the unions fulfil their mission. This is actually the secret of SKOK, and money is for people and not people for money, i.e. financial institutions. We have not used our members as a source of profit. Their good is the aim of the activities of the cooperative savings and credit union
– I pay tribute to you. And what do you think the financial market would have looked like in Poland if SKOK had not developed in Poland after 1989?
– I will give an example of a statement of one of the biggest international banks in Germany who being asked by a journalist why the credit cards of his banks were so expensive gave a very brief answer, ‘because they must be.’ If there are no profit-oriented institutions in the market, if the credit unions do not play such an important role there is a freedom to charge a lot, complete freedom for the functioning of commercial organisations that aim at constant and limitless profits. One could say that if it were not for the SKOK agencies the citizens of the Republic of Poland would have had an even worse financial offer. I must also admit that the charges of banks are still extremely high in Poland as compared to the charges in the EU countries and many times bigger as compared to customers’ incomes. But if there were no SKOK all citizens using financial services offered by banks they would have paid even higher charges.
– Would you have changed anything in the activities of SKOK if you had the chance to work on its development again?
– I think that we have managed to take suitable actions in proper time. We have not made essential mistakes while building the system of the SKOK agencies; mistakes that would require changes. Actually, the system of the SKOK agencies that we have built has been recognised as a world model by all united organisations of the cooperative savings and credit unions. I will mention the example of Moldova. A few years ago the Ministry of Finance of the Republic of Moldova asked us to help them prepare a project of transformation of the credit unions there. We prepared a project of a bill, helped them train workers and activists of the Moldavian credit unions. To my great joy I read that the justification of the state project was to be a system built ‘a la polonaise’ – on the Polish model. A few months ago we signed a similar agreement with the Belorussian Central Bank that is also interested in development of cooperative savings and credit unions in Belarus. Our biggest success to implement our model in another country was in Ukraine where we collaborated on the financial market on the basis of the agreement with the Ukrainian supervision for many years. We trained all workers of this supervision (over 200 presidents of the Ukrainian credit unions underwent training in our centre). Today the cooperative savings and credit unions in Ukraine have over 2,300,000 members, i.e. more than in our SKOK agencies in Poland. This is a reason of our pride. This model of savings has not only proved correct in Poland for 18 years but also is universally recognised as a model and example. First of all, it is an effective model since, what must be noticed, over those 18 years of activities no member of our SKOK agencies has lost a penny. No agency has bankrupted, which cannot be said about banks. Many Polish banks bankrupted during 18 years and hundreds of thousand people had problems in regaining their savings. In spite of various periods of crisis throughout those 18 years – after 1989 we had various stages of economic development – the cooperative savings and credit unions developed all the time and could serve their members.
– We are moved by what you have said. This building of friendly society. Today one speaks a lot about ‘friendly state’. There is even a special parliamentary commission, which aims as looking for ways to make the state friendly to people, to support institutions that help others. Since the state should help all its citizens. Actions against citizens are non-ethical. Once Poland’s Primate Jozef Glemp said at Jasna Gora that we would want Poland to return to normality. It seems that what the SKOK agencies do aim at normality. We would like all institutions, including the MPs, who swear to serve for the welfare of Poland and her citizens, realise what they should do.
– One should ask the question, why Polish citizens who are also consumers of financial services should be deprived of the right to choose between a commercial institution, bank and a SKOK agency. If 92 million Americans and over half of the population of Ireland have the possibility to use the benefit of this choice why someone wants to forbid Poles use an alternative institution that is competitive towards banks? I think that this limitation of choice for citizens is the biggest problem. Actually the politicians who work on the bill on the cooperative savings and credit unions seem to think that the choice between one and the other bank is sufficient, that it is enough to walk along some street to check the offers of the banks and to compare them. However, the difference in these offers will not be essential enough to justify the thesis about competitiveness of this sector. If someone comes across the SKOK agencies he will see that their offers are really extremely competitive. We are convinced that wrong law cannot become binding in the Republic of Poland and the wrong bill will be stopped and SKOK will keep serving well millions of households.
– I wish that to all SKOK agencies and to two million of their members.
"Niedziela" 48/2009