39.Equity and shareholding structure of the bank

Accounting policies

Equity constitutes capital and reserves created in accordance with the legal regulations.

The classification to particular components, discussed below, results from the Polish Commercial Companies Code, the Banking Law and the requirements of IAS 1.7, IAS 1.78.e, IAS 1.54.q-r and IAS 1.79.b.

Equity components of the subsidiaries, other than share capital, in a proportion equal to the interest in the subsidiary held by the parent company, are added to respective equity components of the parent company. The Group's equity includes only those parts of the equity of the subsidiaries which arose after the acquisition of shares by the parent company. In accordance with the legislations which are in force in Poland, only the equity of the parent company and the equity of specific subsidiaries, determined on the basis of stand-alone financial statements, are distributable.

Components of the equity:

  • Share capital comprises solely the share capital of the parent company and is stated at nominal value in accordance with the Memorandum of Association and entry to the Register of Entrepreneurs.
  • Reserve capital is created according to the Memorandum of Association of the Group entities, from the distribution of profits and from share premium less issue costs and it is to cover the potential losses of the Group entities.
  • General banking risk fund in PKO Bank Polski SA is created from profit after tax in accordance with the Banking Law and it is to cover unidentified risks of the Bank’s operations.
  • Other reserves are created from the appropriation of net profits. Other reserves are to cover the potential losses in the statement of financial position.
  • Non-controlling interests represent the part of capital in a subsidiary, which cannot be directly or indirectly assigned to the parent company.
  • Other comprehensive income comprises the effects of valuation of financial assets available for sale, the effective part of cash flow hedges resulting from hedge accounting as well as actuarial gains and losses. Deferred tax on those items is recognised in other comprehensive income. Moreover, the item includes the share of the parent company in the total other comprehensive income of associates and joint ventures and currency translation differences on translation to Polish currency of the net result of the foreign operation at a rate constituting the arithmetical average of foreign exchange rates for the currency as at the day ending each of the months in the financial year published by the National Bank of Poland.

Financial information

Equity31.12.201631.12.2015
   
Share capital1 250.01 250.0
Reserve capital24 490.620 711.2
General banking risk fund1 070.01 070.0
Other reserves3 607.53 536.4
Other comprehensive income(467.2)100.2
Share in other comprehensive income of associates and joint ventures(0.8)(0.2)
Financial assets available for sale(347.4)170.6
Cash flow hedges(108.5)(57.7)
Actuarial gains and losses(10.5)(12.5)
Currency translation differences on foreign operations(221.5)(216.5)
Undistributed profits(18.6)1 222.4
Net profit for the period2 874.02 609.5
Non-controlling interests(16.2)(18.3)
   
Total 32 568.6 30 264.9
 

The decrease in other comprehensive income in respect of revaluation of financial assets available for sale in 2016 of PLN 636.1 million (before tax) related mainly to settling the Visa Ltd. transaction (described in detail in the note ‘Investment securities available for sale’).

The shareholding structure of the Bank

According to the information available as at 31 December 2016 the Bank's shareholding structure is as follows:

Name of entityNumber of sharesNumber of votes %Nominal value of 1 shareShare in equity %
     
As at 31 December 2016    
The State Treasury367 918 98029.43PLN 129.43
Aviva Otwarty Fundusz Emerytalny183 952 4476.72PLN 16.72
Nationale Nederlanden Otwarty Fundusz Emerytalny264 594 4485.17PLN 15.17
Other shareholders733 534 12558.68PLN 158.68
Total1 250 000 000100.00---100.00
As at 31 December 2015    
The State Treasury367 918 98029.43PLN 129.43
Aviva Otwarty Fundusz Emerytalny183 952 4476.72PLN 16.72
Nationale Nederlanden Otwarty Fundusz Emerytalny264 594 4485.17PLN 15.17
Other shareholders733 534 12558.68PLN 158.68
Total1 250 000 000100.00---100.00

1)Number of shares held as at 29 January 2013, reported by Aviva OFE after exceeding the threshold of 5% share in PKO Bank Polski SA’s shareholding structure after settlement the transaction of sale of 153.1 million of PKO Bank Polski SA’s shares by BGK and the State Treasury.

2)Number of shares held as at 24 July 2012, reported by Nationale-Nederlanden OFE after exceeding the threshold of 5% share in PKO Bank Polski SA’s shareholding structure after settlement the transaction of sale of 95 million shares of PKO Bank Polski SA by the State Treasury.

All the shares of PKO Bank Polski SA carry the same rights and obligations. Shares are not preference shares, in relation to voting rights and dividends. However, the Memorandum of Association of PKO Bank Polski SA restricts the voting rights of shareholders holding more than 10% of the total number of votes at the General Shareholders’ Meeting and forbids those shareholders to execute more than 10% of the total number of votes at the General Shareholders’ Meeting. The above does not apply to:

1) those shareholders who on the date of passing the resolution of the General Shareholders’ Meeting introducing the limitation of the voting rights had rights from the shares representing more than 10% of the total number of votes at the Bank (i.e. the State Treasury and BGK),

2) shareholders who have the rights from A-series registered shares (the State Treasury), and

3) shareholders acting jointly with the shareholders referred to in point (2) based on an agreement concerning the joint execution of voting rights from shares. Moreover, limitation of the voting rights shall expire when the share of the State Treasury in the Bank's share capital drops below 5%.

In accordance with § 6 clause 2 of the PKO Bank Polski SA's Memorandum of Association, the conversion of A-series registered shares into bearer shares and the transfer of these shares requires an approval of the Council of Ministers in the form of a resolution. Conversion into bearer shares or transfer of A-series registered shares, after getting the above-mentioned approval, results in the expiry of the above-mentioned restrictions in respect of shares subject to conversion into bearer shares or transfer, to the extent to which this approval was given.

The Bank’s shares are listed on the Warsaw Stock Exchange.

The structure of PKO Bank Polski SA’s share capital:

Series

Type of shares

Number of shares

Nominal value of 1 share

Series amount by nominal value

Series A

registered ordinary shares

312 500 000

PLN 1

PLN 312 500 000

Series A

bearer ordinary shares

197 500 000

PLN 1

 PLN 197 500 000

Series B

bearer ordinary shares

105 000 000

PLN 1

 PLN 105 000 000

Series C

bearer ordinary shares

385 000 000

PLN 1

 PLN 385 000 000

Series D

bearer ordinary shares

250 000 000

PLN 1

PLN 250 000 000

Total

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1 250 000 000

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PLN 1 250 000 000

 

In 2016 and in 2015, there were no changes in the amount of the share capital of PKO Bank Polski SA. Issued shares of PKO Bank Polski SA are not preferred shares and are fully paid.