Act of 9 October 2015 amending the Banking Law and certain other acts.

The key objective of the Act was to provide regulations concerning inactive (dormant) accounts. The changes concerned the impact of the account holder's death on the account agreement, and their objective was to provide easier access to the account for his heirs, legatees, and therefore eliminate problems faced by legal hairs in the process of collecting inherited funds and to implement appropriate legal tools.

System changes.

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:

- Principles and administration of risk management and assessment,
- Controls and security measures applicable to online payments,
- Customer communication and education.

System changes.

Recommendation W concerning risk management models in banks issued by the Polish Financial Supervision Authority.

The Recommendation discusses model risk management and determines model risk management standards with the process framework, the principles of modeling and assessing model quality in compliance with corporate governance standards.

Corporate governance.

Recommendation C concerning concentration risk management issued by the Polish Financial Supervision Authority.

The Recommendation implements changes in the concentration risk management principles.

Credit risk.

Act amending the act on supervision over the financial market and certain other acts of 5 August 2015.

Key changes concern the amount of payments for defaulting under timely repayment of the principal or interest.

Revenue of the Group.

Regulation (EU) of the European Parliament and of the Council of 16 April 2014 on market abuse (MAR).

The regulations sets out new principles of informing and reporting by issuers of securities.

System changes.

The Act on tax on certain financial institutions of 15 January 2016.

The act imposes tax on assets of certain financial institutions, including banks.

Expenses of the Group.

The Act of 9 October 2015 amending the act on payment terms in business dealings, the Civil Code and certain other acts entered into force on 1 January 2016.

The Act changed the method of calculating statutory and maximum interest. The new system is based on the reference rate of the National Bank of Poland instead of the Lombard loan rate. If the interest amount does not result from any acts in law, statutory interest is applied and calculated as: the reference rate of the National Bank of Poland (at present equal to 1.5%) + 3.5%. Maximum interest on acts in law may not exceed twice the amount of statutory interest (10% now) per annum. The Act also specifies maximum default interest. If it has not been specified it should be equal to the reference rate of the National Bank of Poland (1.5%) plus 5.5%. If the interest on a loan is higher, the creditor may demand higher default interest. Maximum default interest may not exceed twice the amount of statutory default interest (14% now).

System changes, Group revenue.

Resolution No. 25/2015 of the Bank Guarantee Fund Council of 25 November 2015 determining the rate of the 2016 annual fee payable to the Bank Guarantee Fund by entities subject to the obligatory guarantee system.

The Bank Guarantee Fund Council determined the rate of the 2016 annual fee payable to the Bank Guarantee Fund by entities subject to the obligatory guarantee system at 0.167% of the total risk exposure amount specified in the Regulation of the European Parliament and of the Council (EU) No. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending the Regulation (EU) No. 648/2012, calculated in line with the provisions of this resolution and the Act of 29 August 1997- the Banking Law.

Expenses of the Group.

Resolution No. 26/2015 of the Bank Guarantee Fund Council of 25 November 2015 on determining a prudential fee for 2016 payable to the Bank Guarantee Fund by entities subject to the obligatory guarantee system.

The Bank Guarantee Fund Council determined the prudential fee for 2016 payable to the Bank Guarantee Fund by entities subject to the obligatory guarantee system at 0.079% of the total risk exposure amount specified in the Regulation of the European Parliament and of the Council (EU) No. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending the Regulation (EU) No. 648/2012, calculated in line with the provisions of this resolution and the Act of 29 August 1997- the Banking Law.

Expenses of the Group.

Draft ordinance of the Minister of Finance on the risk management system and internal controls, remuneration policy and detailed methods of measuring internal capital.

The draft ordinance sets out risk management principles at the Bank, positions, outlines core principles for internal audit and compliance and refers to the principles of developing remuneration policies.

Organizational changes.

Draft amendment to Recommendation H of the Polish Financial Supervision Authority concerning the internal control system at banks.

Amendment to Recommendation H assumes:

- creating an internal control system based on internal controls which ensure meeting statutory requirements (i.e. the effectiveness and efficiency of bank operations, financial reporting reliability, compliance with the risk management principles, compliance with the applicable laws, internal regulations and market standards) to replace the functional control-based approach,
- treating an internal control system as a system independent of the risk management system, creating a compliance and internal audit unit in the internal control system;,
- including the internal control system in the three lines of defense model.

Organizational changes.

Recommendation Z concerning corporate governance issued by the Polish Financial Supervision Authority.

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.

Corporate governance.

Act of 30 November 2016 amending the act on payment services.

From the Bank’s point of view important regulations are those related to:

- presentation to consumers (before entering into agreement) a document including the list of services rendered and related fees charged (“comparable information”) and a cyclical list of fees for services related to the payment account (prepared at least annually),
- ensuring access to the basic payment account,
- enabling transfer of a payment account on terms specified in the act. Banks are obliged to comply with the requirements in question not later than within 18 months of the date the act entered into force, i.e. by 8 August 2018.

ZSystem changes.

MiFID II/MIFIR.

MiFID II and MiFIR (Markets in Financial Instruments Directive / Regulation) impose new requirements on financial market entities concerning investor protection (e.g. new product governance requirements, more stringent incentive requirements, including structured products into the scope of MiFID II, adjusting the principles of communicating with customers and introducing new information requirements, including those related to costs), market transparency (e.g. more detailed reporting requirements concerning transactions and corporate governance and wider powers granted to supervisory authorities (including those related to product interventions).

System and organizational changes.

Act of 15 December 2016 amending the accounting act

The act requires that large public-trust entities, including the Bank, disclose non-financial information (social, employee, environment, human right and anti-corruption issues) in their reports on the activities.

New reporting requirements.

The Act of 10 June 2016 on Bank Guarantee Fund, deposit guarantee system and statutory restructuring with secondary legislation.

The act imposes new disclosure requirements on the Bank with respect to information provided to the Bank Guarantee Fund and the Bank’s clients. Implementing acts thereto detail reporting requirements concerning information provided to the Bank Guarantee Fund and the change of the method of determining fees paid by banks.

New disclosure and reporting requirements, costs of the Group.