The Polish Bank and Enterprise Restructuring Programme: Debt / Equity Swaps. Survey Results

This paper provides a detailed analysis of the Polish Bank Conciliation Agreement (BCA) and relations between state owned enterprises and banks during transition. The study is conducted from the perspective of the enterprises implementing BCAs with debt /equity swaps and regular BCAs using data from surveys conducted by the authors during 1994 to 1995. Results of the analysis suggest that bank conciliation agreements did not protect creditors and sometimes supported bad firms at the cost of good ones. However, there are also positive aspects of the restructuring programme including: the improved supervision and control of the banks and creditors over enterprises, banks being mobilised to restructure their bad debt portfolios which provided an impulse for the internal modernisation of bank structures. The BCA also encouraged the emergence of investment banking dealing both with equity investments and co-participation in the management of privatised firms.