Difficult economic situation facing banks in 1992, resulting mainly from state-owned and commercial banks emerged from the National Bank of Poland holdings of so called ´bad credits´, has had marked impact on a decision to restructure the banking sector in Poland. Restructuring actions have been taken under the Act on financial restructuring of enterprises and banks of 3 February 1993. Income on restructuring bonds issued by the State Treasury was a fundamental factor that improved financial condition of selected banks.

As a result of the State Treasury financing of PLN 4.7 billion provided to banks listed in the article, marked increase in their financial condition was noted. Also banks´ stability improved, solvency ratio reached a satisfactory level, and share of impaired receivables in total lending went down dramatically.

However, service of restructuring bonds is a serious burden for the central government. Interest and principal installments paid to banks are, due to interest capitalization, bigger and bigger. Relevance of the central government´s expense on Treasury bonds is even more, given the fact that the process is to be continued for several years.

Given diminishing role and share of bonds in the performance of the majority of banks, an earlier redemption seems reasonable. At present it will not affect banks´ condition, and at the same time it will reduce the central government´s expense.