Poland's small cooperative banks are on a steep learning curve after decades under a government that shunned entrepreneurial pursuits, according to a group of U.S. bankers that recently visited the country.

What really surprised Wisconsin banker Walter Ollech was how "western" Poland's community banks have become, right down to their problems.

"When I walked into the smaller of these banks," said Mr. Ollech, president of the $28 million State Bank of Withee, "it compared very similarly to State Bank of Withee in its entirety."

Mr. Ollech has recently returned from Poland, where he volunteered in a banker-to-banker project coordinated by Agricultural Cooperative Development International and Volunteers In Overseas Cooperative Assistance.

The program sent U.S. consulting teams experienced in community banking and farm credit to advise Poland's newly independent banks.

Moving to the Forefront

"They're going from the '20s to the '90s in a year or two," said Toby Sherry, a former Wisconsin banking commissioner and banker, comparing Poland's banks since the end of communist rule in 1989 to U.S. bank development since the Depression.

Nonetheless, the bankers who met John Midthun, former president and chief executive of $80 million-asset Northern State Bank of Ashland, Wis., were "by no means were in the back seat," he said.

Mr. Midthun visited the cities of Radzyn and Raciborz for four weeks in February and March with the first of several planned delegations.

Government Control

Many of the country's 1,660 cooperative banks have existed for more than 100 years.

But for decades, the country's planned economy used the banks to remove capital from rural communities.

"The central bank was taking 70% of the banks' profits," Mr. Sherry said.

Bankers also lost financial-management and credit-granting skills under the tight government controls.

But Poland's transformation to a free-market economy has brought its own problems, including increased competition, unemployment, and inflation, currently between 40% and 50%, Mr. Ollech said.

Familiar Problems

"The big difference over there is high interest rates," said Jim Koenig, a bank consultant in Cottage Grove, Minn., who spent 17 years with the farm credit system.

The banks Mr. Ollech visited in Sochaczew and Osieciny were among many Polish banks experiencing familiar farm credit problems.

"I was able to relate to that," said Mr. Ollech, recalling his experience turning around State Bank of Withee in 1986.

He had organized a $660,000 stock sale to recapitalize from agricultural loan losses incurred when prior management extended too much credit.

American Answers

Mr. Koenig, who was paired with Mr. Ollech, said Poland's banks also can improve by implementing employee performance evaluations and detailed job descriptions, as well as cross-selling products.

Other problems included slow check-clearing systems and lack of procedures, such as accurately tracking mortgages, Mr. Sherry said.

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