Regulatory environment

The financial and organizational situation of the PKO Bank Polski SA Group was affected i.e. by the following:

Tax on certain financial institutions (bank tax)
Act of 15 January 2016 on tax on certain financial institutions (Journal of Laws of 2016, item 68 with amendments) obliging banks, insurance companies and other financial market participants to pay tax on adjusted assets since 1 February 2016.Impact on the financial results, profitability of commercial and mortgage banks and insurance companies
Deposit guarantee system fees
- Resolution No. 25 and 26 of the Bank Guarantee Fund (‘BGF’) Council of 25 November 2015 setting out bank’s fees for the deposit guarantee system for 2016: decreasing rate to calculate the annual fee (from 0.189% to 0.167%) and increasing ratio used to calculate prudential fee (from 0.050% to 0.079%), - Amendment of the law on the Bank Guarantee Fund (Journal of Laws of 2016, item 381) amending the frequency of determining the rates of mandatory and prudential fees from annually (based on total risk exposure as at 31 December of prior year) to quarterly (based on data as at the end of the last quarter), - Resolution No. 15, 16, 18, 19 and 36, 37, 48 and 49 of 2016 of BGF Council setting rules for bank’s fees in favour of the deposit guarantee system in the first and second quarter of 2016 (annual fee of 0.04175%, prudential fee of 0.01975 of the total amount of risk exposure), - Resolution No. 308/DGD/2016 of the BGF Management dated 28 October 2016, specifying the amount of payments to be made by banks due to the bankruptcy of the Cooperative Bank in Nadarzyn.Impact on the banks’ operating expenses and tax burden
Prudential requirements
Regulation of the European Parliament and the European Council No. 575/2013 on prudential requirements for credit institutions and investment companies changing the UE ordinance No. 648/2012, and recommendations of the Polish Financial Supervision Authority (PFSA), in particular to increase the short-term liquidity rate LCR to 70%.Impact on the capital base of banks, supervisory prudential standards, business activity of banks, implementation costs
Capital buffers – PFSA additional requirements
- The Act on macroprudential supervision over the financial system and crisis management (Journal of Laws of 2015, item 1513 as amended) in particular, introducing in the period from 1 January 2016 to 31 December 2017 a capital conservation buffer of 1.25%, and from 10 October 2016 - a capital buffer for other systemically important institutions of 0.75% of the total risk exposure calculated in accordance with Art. 92, clause 3 of the Regulation (EU) No.575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms, amending the Regulation (EU) No 648/2012,   - PFSA recommendations for individual banks concerning additional equity requirements to hedge the risk resulting from mortgage loans in foreign currencies granted to households.Impact on the capital requirements for banks on the separate and consolidated level
Tightening requirements on granting of housing loans
Recommendation S of the PFSA on good practice in the management of mortgage secured credit exposures (PFSA Official Journal of 2013, item 23) increasing the requirement for own contribution from 10% to 15% since 1 January 2016.Impact on the level of lending, interest income, fee and commission income of banks
Liquidity risk management
Recommendation P of the PFSA concerning financial liquidity risk management in banks (PFSA Official Journal of 2015, item 14), changing the rules of liquidity risk management since 1 January 2016.Impact on the measurement and management of liquidity risk
Model risk management
Recommendation W of the PFSA concerning model risk management (PFSA Official Journal of 2015, item 49), from the date of implementation by the banks to 30 June 2016.Impact on the model risk management process: model constructions and evaluation of their performance
Maximum non-interest charge
Amendment to the law on consumer loan (Journal of Laws of 2015, item 1357 with amendments) that specifies the maximum level of non-interest expenses since 11 March 2016.Impact on the level of non-interest income of banks
‘Rodzina 500+’ programme
Act on state assistance in raising children (Journal of Laws of 2016, item 195 with amendments) introducing since 1 April 2016 an allowance of PLN 500 a month for each second and subsequent child in a family.Impact on the level of individuals deposits, credit standing (consumer loans), inflow of funds from individuals to the investment fund market
Change in the trade of agricultural real estate
Act of 14 April 2016 on cease of real estate sale of Agricultural Property Stock of the Treasury, and on change of some Acts (including Act on land registers and mortgages) effective since 30 April 2016 (Journal of Laws of 2016, item 585) and amendment of the Act on the Agricultural System and the Act on Land and Mortgage Register (Journal of Laws of 2016, item 1159) effective from 16 August 2016.Impact on the loan policy, the level of lending
Facilitation of the terms of issue of mortgage bonds
Amendment to the law on mortgage bonds and mortgage banks (Journal of Laws of 2015, item 1259) changing the principles of mortgage bonds issuance from 1 January 2016 (among other things, higher limits for issues of mortgage bonds, the possibility of exempting mortgage bonds from withholding tax)Greater opportunities for financing loan business
Banking Enforcement document
Amendment of the Banking Law (Journal of Laws of 2015, item 1854) cancelling bank enforcement title as of 27 November 2016.Impact on risk management by banks, increase in the cost of risk, increase in operating expenses
Dormant accounts
Amendment of the Banking Law (Journal of Laws of 2015, item 1864) defining the treatment of inactive accounts, including accounts of deceased persons, by banks as of 1 July 2016.Impact on the bank’s costs and expenditure
Banking supervision costs
Decree of the Prime Minister (Journal of Laws of 2016, item 1371) changing the principles for calculating and paying fees to cover the costs of banking supervision.Impact on the bank’s costs
The cost of capital market supervision
Amendment of the law on Capital Market Supervision (Journal of Laws of 2015, item 1260) requiring, among others, banks, insurance companies and investment fund companies to participation in the costs of capital market supervision; effective from 1 January 2016.Impact on the level of costs and earnings of investment fund companies
Management policies relating to investment funds’ operations
Amendment to the Act on the investment funds (Journal of Laws of 2016, item 615) stipulating amendments to the information policy and remuneration policy of Investment Fund Management Companies by the end of 2016.Impact on the level of costs of investment funds
Taxation of closed end investment funds (FIZ)
Amendment of the Act on income tax of 29 November 2016 (Journal of Laws of 2016, item 1926) introducing changes which result in covering part of the entities on the closed end investment funds market with CIT as of 1 January 2017.  In the fourth quarter of 2016 the outflow of funds from some FIZ, which resulted in a drop in managed assets of Investment Fund Companies
Restrictions for Open Pension Funds (OFE)
Amendment of the law on Capital Market Supervision (Journal of Laws of 2013, item 1717) changing the rules for payment of pensions from the open pension funds - allowing since 1 January 2016 increased involvement of OFE in shares of companies listed abroad (over 20%) and limiting the involvement of OFE in shares of domestic companies (35%)Impact on the level of open pension fund (OFE) assets, financial results of general pension society (GPS)
Changes in the conduct of insurance business
Amendment to the law on activities of insurance and reinsurance (Journal of Laws of 2015, item 1844), in force since 2016.changes in the standards of capital and prudential requirements
PFSA recommendations for insurance companies
PFSA recommendations dated 22 March 2016 relating to checking the adequacy of insurance products for the customer’s needs and abilities, and to the product management system; they should be implemented by the insurance companies by 1 July 2016.Impact on the costs of insurance companies

The activity of the PKO Bank Polski SA Group influenced new legislation introduced in the Ukraine (where operates, among others, a subsidiary KREDOBANK SA), including:

  • Resolutions of the National Bank of Ukraine (NBU) reducing the discount rate – by Resolution No. 278 of 2016 as of 22 April 2016 the NBU reduced the discount rate from 22% to 19%, by Resolution No. 88 as of 24 June 2016 the NBU reduced the discount rate from 19% to 16.5%, by Resolution No. 172 as of 29 July 2016 the NBU reduced the discount rate from 16.5% to 15.5%, by Resolution No. 277 as of 16 September 2016 the NBU reduced the discount rate from 15.5% to 15%; by Resolution No. 372 of 2016 as of 28 October 2016 the NBU reduced the discount rate from 15% to 14%;
  • order No. 140, 192, 341, 386, 402 and 410 from year 2016 of the Management Board of the National Bank of Ukraine (NBU) introducing a number of changes in conducting transactions on money-lending and currency market, including the transfer of dividends to foreign investors;
  • order No. 338 from year 2016 of the NBU specifying inclusion to the bank’s share capital of the financial aid provided by shareholders after obtaining permission of the NBU);
  • order No. 341 of the NBU changing polices in determining exchanges rates by banks since 15 June 2016;
  • Resolution of the Council of Ministers No. 662 of 2016 preventing paying out pensions, allowances and wages of budget-sector institutions by banks whose share in the banking sector assets market is lower than 1%.

The regulatory solutions which will affect the financial position of banks and their groups in Poland over the following quarters include

  • The following new regulatory solutions may affect the financial results of the sector in the perspective of the nearest quarters:
  • the required own contribution increase from 15% to 20% from 1 January 2017, resulting from recommendation S of the PFSA concerning mortgage secured credit exposures (PFSA Official Journal of 2013, item 23) (an impact on housing loans),
  • amendment to recommendation S (under preparation), increasing the risk weight for foreign currency loans (impact on adequacy ratio),
  • extension of the de minimis Programme for 2017 (amendment of the Decree of the Minister of Finance on granting de minimis aid by Bank Gospodarstwa Krajowego in the form of loan repayment guarantees, Journal of Laws of 2016, item 1471),
  • increase in the short-term liquidity ratio to 80% as of 1 January 2017 (from 70% in 2016) in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms and PFSA recommendations,
  • decrease in the limit of the value of transactions between entrepreneurs as of 1 January 2017 that must be settled through a bank account from EUR 15 thousand to PLN 15 thousand (in accordance with the Act on Freedom of Economic Activity, Journal of Laws of 2015, item 584 as amended), which should affect the amount of funds on bank accounts,
  • including a free basic payment account in the banks’ offer from 8 February 2017,
  • a change in the loan concentration risk management principles for universal and mortgage banks as of 1 January 2017, resulting from recommendation C of the PFSA (PFSA Official Journal of 2016, item 15),
  • implementation of the Mortgage Loan Act, which is aimed at improving borrower protection and reducing asymmetry in the level of knowledge of the customer and the bank (currently a draft is under preparation),
  • changed principles for supporting renewable energy generators (Journal of Laws of 2016, item 925) and a change in the principles for property tax assessment for wind power plants (Journal of Laws of 2016, item 961), which shall affect the financial condition of entities that took bank loans,
  • covering part of the entities on the closed end investment funds market with CIT as of 1 January 2017.