In 2015, the financial and organizational condition of the Group was affected by the following amendments of law:
Effect on business operations
Resolution No. 183/2014 of the Polish Financial Supervision Authority dated 24 June 2014 on issuing Recommendation U concerning good practices in bancassurance.
In particular, banks were obligated to ensure client’s freedom of choice regarding the insurer.Banks cannot act as insurers and insurance agents at the same time, while their fee for the insurance products offered shall be determined proportionally to the costs incurred by them. Recommendation U was issued to improve the standards of cooperation between banks and insurance companies with regard to offering clients insurance products through banks and determining conditions for stable long-term bancassurance market development.
Recommendation U has entered into force as of 31 March 2015.
Fee and commission income, fee and commission expense, interest expense, the Bank's offer.
Recommendation P dated 10 March 2015.
In force since 31 December 2015.
The objectives of the Recommendation P on managing the liquidity risk of banks include:determining the bank’s of liquidity risk tolerance, recognizing the full scope of all liquidity risk types, to include the risk of unexpected need for liquidity, constant presence in selected key financial markets, diversifying liquid assets, stress testing, collateral management, mid-day liquidity management, disclosing information regarding bank’s liquidity.
Costs of liquidity maintenance, interest expense and reporting obligations.
Act of 9 October 2015 on performing the Agreement between the Government of the Republic of Poland and the Government of the United States of America to Improve International Tax Compliance and to Implement FATCA.
FATCA is a set of regulations combatting tax evasion by American taxpayers using foreign bank accounts.FATCA is to prevent using foreign financial institutions to conceal income and build aggressive tax planning structures by American taxpayers.For countries not joining FATCA, all financial transfers from the U.S. to foreign financial institutions are charged with 30% withholding tax.
Obligation to transfer to the U.S. the data regarding bank accounts held by American citizens through the Polish Ministry of Finance.
The act on macroprudential supervision over the financial system and crisis management of 5 August 2015.
The objective of the Act is to implement EU regulations concerning operations of credit and investment institutions to the Polish law.The Act specifies the requirements for banks and investment firms which should be met in order to start operations and provisions on prudential supervision over banks and investment firms.Moreover, the Act introduces supervision to the Polish financial system, the objective of which is to identify, assess and monitor systemic risk occurring in the financial system and mitigate such risk.
Maintaining an appropriate level of the bank’s equity.
Act of 25 September 2015 amending the Banking Law and certain other acts – Bank Writ of Enforcement.
The objective of the Act is to adjust the law to the decision of the Constitutional Tribunal dated 14 April 2015 (file No. P 45/12) stating the non-constitutional nature of certain provisions of the Banking Law, which authorizes banks to issue writs of enforcement.
Costs of collection proceedings and longer process period.
The act on complaint handling procedure by financial service providers and Financial Ombudsman of 5 August 2015
The Act explicitly determines the method and deadlines for handling complaints by financial service providers under complaint procedures and introduces the function of a Financial Ombudsman.
The operating costs of the Ombudsman and his office will be borne by banks and calculated as the product of the total balance sheet assets of the Bank and a rate of at maximum 0.0006%.
The Act on supporting borrowers in a difficult financial situation who have been granted a mortgage loan of 9 October 2015.
The Act specifies the principles of financial support granting to individuals who repay housing loans and who have found themselves in a difficult financial situation and the terms and conditions for obtaining such support.The Bank is obliged to pay a premium to the Borrowers’ Support Fund proportionally to the consumer housing loan portfolio with the principal or interest delinquent by over 90 days.
Act of 28 November 2014 amending the act on payment services (Journal of Laws of 2014 item 1916).
The Act provides for a reduction in the maximum statutory interchange rate to 0.2% for debit cards and to 0.3% for credit cards.
Fee and commission income.
Resolution No. 28/2014 of the Banking Guarantee Fund Council of 19 November 2014 determining the rate of the 2015 annual fee payable to the Banking Guarantee Fund through entities subject to the obligatory guarantee system.
The Banking Guarantee Fund Council determined the annual fee for 2015 as 0,189% of the product of the total of capital requirements pertaining to each risk type and to the exceeding of limits and other standards determined in the Banking Law and 12.5.
Resolution No. 29/2014 of the Banking Guarantee Fund Council of 19 November 2014 determining the rate of the 2015 annual fee payable to the Banking Guarantee Fund through entities subject to the obligatory guarantee system.
The Banking Guarantee Fund Council determined the prudence fee for 2015 as 0.05% of the product of the total of capital requirements pertaining to each risk type and to the exceeding of limits and other standards determined in the Banking Law and 12.5.
Resolution No. 148/2013 of the Polish Financial Supervision Authority dated 18 June 2013 on issuing Recommendation S on good practices in managing mortgaged credit exposures.
According to PFSA guidance, since January 2015 own contribution required for real property purchases credited by banks has been increased from 5% to 10% of the property value.
Interest income, net impairment losses.
New regulations enacted in 2016 will affect financial performance of the Polish banking sector and the Group, in particular:
Effect on business operations
Act amending the Banking Law and certain other acts
The objective of the Act is to provide regulations concerning inactive (dormant) accounts.The changes will concern the impact of the account holder's death on the account agreement, easier access to the account for heirs, legatees, and therefore eliminate problems faced by legal hairs in the process of collecting inherited funds, implementation of appropriate legal tools.
Recommendation of the Polish Financial Supervision Authority concerning securing of online payments made by banks, national payment institutions, national electronic money institutions and credit unions.
The objective of the Recommendation is to provide standard minimum requirements for secure online payment services provided by banks, national payment institutions, national electronic money institutions and credit unions.The Recommendation covers the following areas:
1) Principles and administration of risk management and assessment,
2) Controls and security measures applicable to online payments,
3) Customer communication and education.
Recommendation Z concerning corporate governance issued by the Polish Financial Supervision Authority.
The Recommendation will come into force on 1 November 2016.
The Recommendation concerns the principles of internal management in banks.It will regulate the following areas:organizational structure, tasks, obligations, composition and activities of the supervisory board, management board, top executives, risk and internal control management, IT systems and communication, going concern and management transparency in the bank.
Recommendation W concerning risk management models in banks issued by the Polish Financial Supervision Authority.
The Recommendation will come into force on 1 July 2016.
The Recommendation discusses model risk management and determines model risk management standards with the process framework, the principles of modelling and assessing model quality in compliance with corporate governance standards.
Act amending the act on supervision over the financial market and certain other acts of 5 August 2015.
The Act will come into force on 11 March 2016.
Key changes concern the amount of payments for defaulting under timely repayment of the principal or interest, which will limit non-interest income of the bank.
Fee and commission income.
Moreover, works and negotiations have been carried out on the following regulations:
Effect on business operations
Act on mandatory automatic exchange of information in the field of taxation.
The objective of the act is to implement the provisions of the Directive 2014/107/EU of the Council dated 9 December 2014.Apart from a unified information exchange standard it is possible to exchange financial information between tax administrations of individual countries, to prevent adverse phenomena and contribute to increasing the inflows to the state budget.
Administrative costs, reporting requirements.
Recommendation C concerning concentration risk management issued by the Polish Financial Supervision Authority.
Draft Recommendation C covers in particular the provisions concerning the strategy and procedures of concentration risk management in place, considering concentration risk of intra-group exposures, reliable concentration risk identification and assessment processes in place, concentration risk mitigation limits in place.
Regulation of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data.
The Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data is planned to be replaced with Regulation of the European Parliament and of the Council on protection of individuals with regard to the processing of personal data.When the latter enters into force the substantive law on personal data protection will be fully harmonized in the European Union.