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Notes to the consolidated financial statements

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43. Related parties

Entities related to the Group:

• Parent: Poczta Polska S.A.,
• entity exercising significant influence on the Bank: PKO Bank Polski S.A.;
• other entities from the Poczta Polska Capital Group;
• other subsidiaries of PKO Bank Polski S.A.;
• top executives of the Bank (Members of the Management Board, Members of the Supervisory Board, Managing Directors and their Deputies, Office Directors and their Deputies) and top executives of the Bank’s subsidiaries;
• top executives of the Bank’s Parent.

In accordance with IAS 24, the Group treats the subsidiaries of the State Treasury of the Republic of Poland as its related parties, since the State Treasury controls the Bank through its majority shareholder. For the purposes of consolidated financial statements, subsidiaries of the State Treasury are companies wholly-owned by the State Treasury, state-owned enterprises and entities with the State Treasury as the majority shareholder, whose list is published on the website of the Ministry of State Treasury, as well as local government entities. Furthermore, the Group has benefited from the exemptions referred to in points 25-26 of IAS 24, i.e. with respect to transactions with related parties of the State Treasury; in the absence of individually significant transactions they have been presented jointly.

In 2016, non-standard, significant related-party transactions whose nature and terms were not related to ongoing business operations were not concluded. All transactions were concluded on the arm’s length basis.

Presented below is the nature of significant agreements with related parties:

• cooperation agreement dated 2 September 2011 as amended (entered into by and between the Bank and Poczta Polska S.A.) determining the areas and terms of cooperation, general terms and conditions of mutual relations, non-competition and obligations of the parties. The agreement does not directly affect the current operations, but it exerts considerable impact on this area;
• agreements concerning financial intermediation services provided on behalf of and for the Bank in respect of a wide array of products and services of the Bank, including, in particular, the Agency Agreement concluded with Poczta Polska S.A. on 2 September 2011 as amended;
• agreements related to financial intermediation services provided by the Bank on behalf of and for Poczta Polska S.A. (including a bank account agreement with additional products);
• bancassurance agreements, including in particular an agency agreement concluded with Pocztowe Towarzystwo Ubezpieczeń na Życie S.A. of 8 April 2015 as amended and an agency agreement concluded with Pocztowe Towarzystwo Ubezpieczeń Wzajemnych of 30 November 2010 as amended;
• a package of agreements regarding financial services performed by the Bank, in particular with regard to cash processing (agreement with Poczta Polska S.A. on cash services for the Bank’s own sales outlets);
• a lease agreement setting out the terms and conditions of leasing/sub-leasing space or premises to be used as the Bank’s branches as part of the sales outlet infrastructure of Poczta Polska S.A.;
• an agreement on the lease of hardware, use of an operating system and databases.

Receivables, liabilities, revenue and expenses arising from related-party transactions have been presented below.

^* _{Settlements with the parent company due to payments to and withdrawals from bank accounts and deposits are presented as a net value in the Group’s
balance sheet.}

^** _{Including the Parent’s cash generated from the entity’s operations deposited on current and special purpose accounts under agreements concluded with the Bank.}

The revenue and costs have been presented in the table below in amounts received from counterparties (i.e. on a cash basis).

The accounting presentation of revenues and costs in the table below is the same as the presentation in the consolidated income statement.

^* _{The negative value of revenue and costs results from the costs of distribution of bank product accounted for using the effective interest method, offset by interest income.}

^* _{Settlements with the parent company due to payments to and withdrawals from bank accounts and deposits are presented as a net value in the Group’s balance sheet.}

^** _{Including the Parent’s cash generated from the entity’s operations deposited on current and special purpose accounts under agreements concluded with the Bank.}

The revenue and costs have been presented in the table below in amounts received from counterparties (i.e. on a cash basis).

The accounting presentation of revenues and costs in the table below is the same as the presentation in the consolidated income statement.

^* _{The negative value of revenue and costs results from the costs of distribution of bank product accounted for using the effective interest method, offset by interest income.}

Receivables, liabilities, revenue and costs of transactions with State Treasury entities and local authorities excluding companies from the Poczta Polska Capital Group and PKO Bank Polski S.A. Capital Group.

Transactions with subsidiaries of the State Treasury other than those from the Poczta Polska S.A. Capital Group and PKO Bank Polski S.A. Capital Group are related to banking operations (funding, deposits).

Loans and advances granted to members of the Management and Supervisory Board of the Bank and the Bank's Parent

Transactions with the management are in line with the standard product offering.

^* _{Members of the Management Board of the Bank’s Parent who are not members of the Supervisory Board of the Bank.}

* _{Members of the Management Board of the Bank’s Parent who are not members of the Supervisory Board of the Bank.}

^* _{Members of the Management Board of the Bank’s Parent who are not members of the Supervisory Board of the Bank.}

^* _{Members of the Management Board of the Bank’s Parent who are not members of the Supervisory Board of the Bank.}

Remuneration paid or due to the Management and Supervisory Boards of the Bank and its subsidiaries

Remuneration paid or due to other senior management of the Bank and its subsidiaries