The Banking Regulation Review - Poland - Chapter

The Banking Regulation ReviewThe Banking
Regulation
Review
Law Business Research
Seventh Edition
Editor
Jan Putnis

The Banking Regulation Review
The Banking Regulation Review
Reproduced with permission from Law Business Research Ltd.
This article was first published in The Banking Regulation Review, 7th edition
(published in May 2016 – editor Jan Putnis).
For further information please email
nick.barette@lbresearch.com

The Banking
Regulation
Review
Seventh Edition
Editor
Jan Putnis
Law Business Research Ltd

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i
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Acknowledgements
ii
GILBERT + TOBIN
GORRISSEN FEDERSPIEL
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HOGAN LOVELLS BSTL, SC
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PINHEIRO NETO ADVOGADOS
RUSSELL MCVEAGH
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SYCIP SALAZAR HERNANDEZ & GATMAITAN
T STUDNICKI, K PŁESZKA, Z ĆWIĄKALSKI, J GÓRSKI SPK
URÍA MENÉNDEZ
WERKSMANS ADVISORY SERVICES (PTY) LTD

iii
Editor’s Preface ��vii
Jan Putnis
Chapter 1 INTERNATIONAL INITIATIVES�� 1
Jan Putnis and Kristina Locmele
Chapter 2 ARGENTINA�� 27
Santiago Carregal and Diego A Chighizola
Chapter 3 AUSTRALIA�� 40
Hanh Chau, Adam D’Andreti, Peter Feros, Paula Gilardoni, Deborah
Johns, Louise McCoach, Duncan McGrath and Peter Reeves
Chapter 4 BARBADOS�� 60
Sir Trevor Carmichael QC
Chapter 5 BELGIUM�� 69
Anne Fontaine and Pierre De Pauw
Chapter 6 BRAZIL�� 83
Tiago A D Themudo Lessa, Rafael José Lopes Gaspar and Gustavo
Ferrari Chauffaille
Chapter 7 CAMBODIA�� 94
Bun Youdy
Chapter 8 CANADA�� 111
Scott Hyman, Carol Pennycook, Derek Vesey and Nicholas Williams
Chapter 9 COLOMBIA�� 127
Luis Humberto Ustáriz González
CONTENTS

iv
Contents
Chapter 10 DENMARK�� 142
Morten Nybom Bethe
Chapter 11 EUROPEAN UNION�� 152
Jan Putnis, Timothy Fosh and Helen McGrath
Chapter 12 FINLAND�� 177
Janne Lauha and Hannu Huotilainen
Chapter 13 FRANCE�� 188
Olivier Saba, Samuel Pariente, Mathieu Françon, Jessica Chartier
and Béna Mara
Chapter 14 GERMANY�� 209
Thomas Paul, Sven H Schneider and Jan L Steffen
Chapter 15 HONG KONG�� 222
Peter Lake
Chapter 16 HUNGARY�� 239
Péter Köves and Szabolcs Mestyán
Chapter 17 INDIA�� 247
Cyril Shroff and Ipsita Dutta
Chapter 18 INDONESIA�� 263
Yanny M Suryaretina
Chapter 19 IRELAND�� 286
William Johnston, Robert Cain and Sarah Lee
Chapter 20 ITALY�� 301
Giuseppe Rumi and Andrea Savigliano
Chapter 21 JAPAN�� 316
Hirohito Akagami and Wataru Ishii

v
Contents
Chapter 22 LATVIA�� 326
Armands Skudra
Chapter 23 LUXEMBOURG�� 336
Josée Weydert, Jad Nader and Milos Vulevic
Chapter 24 MALAYSIA�� 355
Rodney Gerard D’Cruz
Chapter 25 MEXICO�� 374
Federico De Noriega Olea and Juan Carlos Galicia Orozco
Chapter 26 NETHERLANDS�� 385
Mariken van Loopik and Maurits ter Haar
Chapter 27 NEW ZEALAND�� 400
Guy Lethbridge and Debbie Booth
Chapter 28 NORWAY�� 414
Terje Sommer, Richard Sjøqvist, Markus Nilssen
and Steffen Rogstad
Chapter 29 PANAMA�� 426
Mario Adolfo Rognoni
Chapter 30 PHILIPPINES�� 437
Rafael A Morales
Chapter 31 POLAND�� 452
Tomasz Gizbert-Studnicki, Tomasz Spyra and
Michał Torończak
Chapter 32 PORTUGAL�� 471
Pedro Ferreira Malaquias and Hélder Frias
Chapter 33 SINGAPORE�� 484
Francis Mok and Wong Sook Ping

Contents
vi
Chapter 34 SLOVENIA�� 495
Simon Žgavec
Chapter 35 SOUTH AFRICA�� 514
Ina Meiring
Chapter 36 SPAIN�� 525
Juan Carlos Machuca and Joaquín García-Cazorla
Chapter 37 SWEDEN�� 545
Fredrik Wilkens and Helena Håkansson
Chapter 38 SWITZERLAND�� 554
Shelby R du Pasquier, Patrick Hünerwadel, Marcel Tranchet, Maria
Chiriaeva and Valérie Menoud
Chapter 39 UNITED ARAB EMIRATES�� 575
Amjad Ali Khan and Stuart Walker
Chapter 40 UNITED KINGDOM�� 584
Jan Putnis, Nick Bonsall and Edward Burrows
Chapter 41 UNITED STATES�� 607
Luigi L De Ghenghi
Appendix 1 ABOUT THE AUTHORS�� 659
Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS�� 683

vii
EDITOR’S PREFACE
Nearly eight years after the collapse of Lehman Brothers it might have been expected that
fundamental questions about the business models, governance and territorial scope of large
banks would have been answered clearly, but that is not yet truly the case. Debates rage on
in many countries about ‘too big to fail’, management accountability in banks, resolution
planning and conduct issues in the banking sector. What is the ‘safest’ form of international
banking and what might shareholders in banks reasonably expect as a long-term rate of
return on their investment? When is all this uncertainty going to end? Perhaps it never will
for so long as large banks remain as important to the global economy as they are and the
political classes throughout the world remain divided on whether this is a good thing. It
is also worth remembering that the reform agenda that was born in the financial crisis of
2007–2009 established a very long implementation period – to 2019 and beyond – for many
of the regulatory changes agreed upon by the G20 and the Basel Committee. So we are still
in the midst of what will no doubt be seen in decades to come as the ‘post-crisis’ period in
banking regulation.
Looking forward then, what can we see beyond the implementation of the post-crisis
reforms? That depends, of course, in part on whether there is another cross-border banking
crisis. It is worth noting in this context that localised banking failures remain commonplace,
and with more countries around the world introducing specialised bank resolution regimes
there will be further opportunities to test the uses and pitfalls of bail-in and other resolution
powers.
The continuing debate about the impact of technology on banks has increased
significantly in volume in much of the world in the past year. Forecasts of the eventual eclipse
of banks by technology firms seem wide of the mark in the short to medium term, although
there is clearly an ‘adapt or die’ threat to many banks in the longer term. One adaptation of
sorts that we may well see more of in the next few years is banks acquiring technology firms (or
otherwise entering into strategic partnerships with them).
The most obvious benefits of new technology in the banking sector concern the
customer interface and market infrastructure. However, some important but less immediately
obvious ways in which technology will continue to revolutionise banking arise in the context
of the safety and soundness of banks. For example, some banks are looking at how innovative

Editor’s Preface
viii
uses of technology can improve their risk management, and ultimately the credibility of their
recovery and resolution plans through, for example, more precise classification and management
of derivative positions and counterparty relationships.
Many of the largest cross-border regulatory investigations into past conduct in the
banking sector have drawn to a close over the past year. While for some that signalled the close
of a painful and costly chapter in the post-crisis development of the banking sector, it remains
difficult to conclude that the threat of further such investigations has gone away.
As an English lawyer it would be odd if I did not mention the June 2016 referendum
in the UK on membership of the European Union, parochial though that may seem to some
readers outside Europe. The legal and regulatory regime that will apply to business that banks
undertake in and from London is, however, of global interest, and the result of the referendum,
and its aftermath, will therefore be of very considerable importance to all large banks and many
smaller ones.
This seventh edition of The Banking Regulation Review contains chapters provided
by authors in 39 countries and territories in March and April 2016, as well as chapters on
International Initiatives and the European Union. My sincere thanks, as in previous years, go
to the authors who have made time to contribute their chapters despite their heavy workload.
The team at Law Business Research have, once again, tolerated the hectic schedules
and frequent absences on business of many of the authors, and I would like to thank them for
doing so with such good humour and understanding. Thank you also to the partners and staff
of Slaughter and May in London and Hong Kong for continuing to encourage projects such as
this book, and in particular to Ben Kingsley, Peter Lake, Nick Bonsall, Edward Burrows, Tim
Fosh, Kristina Locmele and Helen McGrath.
Jan Putnis
Slaughter and May
London
May 2016

452
Chapter 31
POLAND
Tomasz Gizbert-Studnicki, Tomasz Spyra and Michał Torończak1
I INTRODUCTION
The Polish economy, just as in other central and eastern European countries, continues to be
characterised by a low level of financial intermediation. The assets of the financial sector in
Poland amount to only 121.5 per cent of GDP, compared with 494 per cent in the eurozone.
The Polish financial sector is at the same time heavily dominated by banks, which hold
73.5 per cent of all financial assets. According to information from the Polish Financial
Supervision Authority (PFSA), in January 2016, there were 38 commercial banks operating
in Poland, 27 branches of EU credit institutions and 561 cooperative banks. The total assets
of the banking sector in Poland amount to approximately 1.6 billion zlotys and the sector
employs approximately 171,000 people. Generally, Polish banks remained well capitalised
with the capital ratios comfortably beyond the Basel III requirements (with the average
capital adequacy ratio at the level of 15.6 per cent). However, it should be noted that in the
past year there was one case of a bank failure of one of the cooperative banks. It was the first
case of bankruptcy in the Polish banking sector since 2001.
In 2015 foreign investors from approximately 17 countries controlled 61.5 per cent
of the assets of the Polish banking sector, including 28 commercial banks and all branches
of EU credit institutions. The main investments came from Italy (13 per cent), followed by
Germany (10.4 per cent), Spain (9.1 per cent) and the Netherlands (9 per cent). Following
the acquisition of Nordea Bank Polska by the state-controlled PKO BP, the Polish State
Treasury increased its share to 24.1 per cent of the assets of the Polish banking sector. The
Polish State Treasury holds control over five commercial banks.
The concentration level of the Polish banking sector (i.e., the market share in assets
of the five largest banks) was 48.8 per cent, which was slightly higher than in the previous
year. The largest Polish bank was state-controlled PKO BP, with the total balance sheet of
1 Tomasz Gizbert-Studnicki is a senior partner, Tomasz Spyra is a partner and Michał
Torończak is an associate at T Studnicki, K Płeszka, Z Ćwiąkalski, J Górski Sp.k.

Poland
453
approximately 251 billion zlotys, followed by Pekao SA (a subsidiary of Italy’s UniCredit:
total balance sheet of about 165 billion zlotys), Bank Zachodni WBK (Santander Group:
total balance sheet of around 125.5 billion zlotys), mBank (formerly BRE Bank, a subsidiary
of Germany’s Commerzbank: total balance sheet of approximately 119 billion zlotys) and
ING Bank Śląski (ING Group: total balance sheet of approximately 109 billion zlotys).
In 2015 there were MA deals in the Polish banking sector. However, a lot of the
activity was focused on the consummation of transactions commenced in the previous year.
In February 2015 Alior Bank finalised the acquisition of Meritum Bank for 352 million
zlotys and in April 2015 the French BNP Paribas finalised its acquisition of Bank BGŻ from
Rabobank for 4.2 billion zlotys. The two banks are now working on their operational merger
that is anticipated to be finalised by the end of 2016. The merger of Bank BGŻ BNP Paribas
with another Polish bank owned by BNP Paribas – Sygma Bank Polska – is also scheduled
for 2016. The merger will fulfil the commitments undertaken by BNP Paribas towards the
PFSA when notifying its intention to acquire the shares of Bank BGŻ. In addition, the
largest Polish insurer PZU SA, after its acquisition of 25 per cent of the shares of Alior Bank
from Carlo Tassara, announced its interest in further acquisitions of the shares of banks.
In 2015 Austrian Raiffeisen and American GE Capital announced their plans to withdraw
from Poland and sell their Polish entities. However, so far no conclusive decisions have been
made on these issues. The PFSA considers the market to be structured optimally, and the
regulator will likely not support its further consolidation. However, the PFSA may make
some exceptions for Polish-owned financial institutions, as the idea of ‘domestication’ of the
Polish banking sector has been vigorously debated and has many supporters.
II THE REGULATORY REGIME APPLICABLE TO BANKS
Pursuant to the legal definition, a bank is a legal person, established in accordance with the
applicable laws, operating under authorisation to perform banking transactions involving any
risk for the funds entrusted to the bank and repayable in any way. Under Polish law, banks
can be established either as state banks (by the Polish government) or as private banks in the
form of a joint-stock company or a cooperative.
Alongside the commercial banks, there are about 50 credit unions operating in Poland.
The number of credit unions is decreasing due to the intensive process of restructuring of
this sector. Credit unions merge or are acquired by other credit unions or banks. In general,
the situation of the credit unions sector is difficult and requires intensive remedial actions.
Credit institutions from other EU Member States may provide cross-border financial
services in Poland on the basis of the single banking passport or they can operate in Poland
via a branch. Foreign banks may operate in Poland via a subsidiary (which is formally a
separate bank licensed by the Polish regulator) or a branch (establishment of a branch by a
non-EU institution requires an authorisation from the PFSA). Branches of foreign non-EU
banks must accede to the Polish deposit insurance system to the extent that the guarantee
system in the country of origin does not ensure the disbursement of guaranteed funds
within the limits stipulated by Polish law (i.e., the equivalent of €100,000 – Poland has not
introduced unlimited deposit insurance). A branch of an EU credit institution is free to join
the Polish deposit insurance system in order to increase the insured amount to the limits
stipulated by Polish law when the amount of deposits guaranteed by the guarantee scheme of

Poland
454
its home country is lower. However, it should be noted that the new legal framework for the
deposit insurance system to be implemented in Poland in 2016 will eliminate the possibility
of accession by a branch of an EU credit institution to the Polish deposit insurance system.
Foreign banks and EU credit institutions can also open their representative offices in
Poland. The scope of activities of a representative office of a foreign bank or an EU credit
institution may consist exclusively of advertising and marketing for the foreign bank within
the limits specified in the authorisation.
Polish law provides for a list of activities that can be performed exclusively by banks.
Those exclusive banking operations comprise:
a taking of deposits payable on demand or at a specified maturity, and maintenance of
such deposit accounts;
b maintenance of other bank accounts,
c extension of credit;
d extension and confirmation of bank guarantees, issuance and confirmation of letters
of credit;
e issuance of bank securities; and
f bank monetary settlements.
Banks may also engage in other activities that can be performed not only by banks, such as:
a extension of cash loans;
b operations involving cheques and promissory notes, and operations relating to
warrants;
c providing payment services and issuance of electronic money;
d forward transactions;
e purchasing and selling of debts;
f safekeeping of assets and securities, and provision of safe deposit facilities;
g purchasing and selling foreign currencies;
h extension and confirmation of endorsements;
i intermediation in money transfers and foreign exchange settlements;
j receiving or acquiring shares and rights attached thereto, shares of other legal persons
and participation units in investment;
k assuming commitments relating to the issuance of securities;
l trading in securities;
m swapping debt for a debtor’s assets on terms agreed with the debtor;
n purchasing and selling real property;
o providing financial consulting and advisory services;
p providing certification services within the meaning of the regulations on electronic
signatures, except for issuance of qualified certificates used by banks in activities to
which they are parties;
q providing other financial services; and
r performing other activities, if permitted by other laws.
Polish law does not provide for the separation of commercial and investment banking. Banks
may provide services under provisional underwriting agreements and firm commitment
underwriting agreements or execution and performance of other similar agreements on
financial instruments and – subject to authorisation by the PFSA – also perform other
brokerage services such as:

Poland
455
a acceptance and transfer of orders to purchase or sell financial instruments;
b execution of purchase and sell orders of the financial instruments for the account of
the customer;
c acquisition or disposal, for the bank’s account, of financial instruments;
d management of portfolios including one or more financial instruments;
e investment advice; and
f offering financial instruments.
The activities of banks, their branches and representative offices are supervised by the PFSA.
The supervision of activities of a branch or representative offices of foreign non-EU banks in
Poland, including the scope of examinations and procedures for their performance, may be
performed to the extent laid down in an agreement between the PFSA and the supervisory
authorities in their home countries. The PFSA is a consolidated supervisor created in 2006 as
a result of a merger of the securities, insurance, pension system and banking supervisors. The
PFSA is in charge of banking, capital markets, insurance and pension scheme supervision,
as well as supervision of payment institutions and credit unions. Despite the consolidation,
however, the supervisor serves as an umbrella under which the cross-regulatory functions are
housed and under which traditional sectoral supervisory units are maintained as separate
operating divisions that focus on traditional sectors such as banking, insurance and securities.
Despite some public discussions that take place from time to time, there are currently no
specific plans to reform the structure of the supervision as has happened in the United
Kingdom.
The president of the PFSA, the president of the National Bank of Poland, the president
of the Bank Guarantee Fund and the Ministry of Finance coordinate their actions in the
Financial Stability Committee.
As already mentioned, it is expected that in 2016 the new legal framework for
the deposit guarantee scheme will come into force. In addition to the elimination of the
possibility of accession by a branch of an EU credit institution to the Polish deposit guarantee
scheme, other major amendments to the scheme include, inter alia: (1) specifying that the
disbursement of guaranteed funds shall be payable within seven working days from the
day of fulfilment of the guarantee condition (i.e., the day indicated in the decision of the
PFSA as the day of suspension of a bank’s activity and appointing a receiver in the bank,
unless one had been indicated previously, as well as filing a petition to declare bankruptcy
at a relevant court) instead of 20 working days; (2) changes to the financing structure of
the Bank Guarantee Fund such as introducing extraordinary contributions; and (3) other
modifications in calculating contributions. In general, it seems that membership in the
revised deposit guarantee scheme will be more burdensome for banks, especially given the
new way of calculating contributions and the relatively short time for reaching the targeted
amount of funds in the scheme. At the same time, the modified scheme shall provide better
protection for the depositors, in particular by faster disbursement of guaranteed funds.
III PRUDENTIAL REGULATION
i Relationship with the prudential regulator
The objective of banking supervision is to ensure the safety of funds held in banks and the
compliance by the banks with the provisions of law and the banking licence.

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456
Since 2007, the PFSA has been implementing a risk-based approach to supervision.
The goal of the regulator is to come up with a harmonised methodology for supervision that
would use risk as the major factor in determining priorities and the frequency of supervisory
actions. Every department of the PFSA is expected to follow a standardised approach for
supervisory assessment based on a listed set of criteria, which specify the risks associated
with the activities of supervised entities and provide for more accurate quantification of risks
associated with activities of various capital groups on the Polish market. The harmonised
methodology encompasses the method of assessment of the risk management and control
mechanisms of supervised entities, the compliance of activities of supervised entities with the
law and the method for identification of irregularities in business conduct.
Banks are required to submit audited financial statements to the PFSA, on a
consolidated and unconsolidated basis, together with the auditor’s opinion and report.
Banks, branches and representative offices of non-EU banks in Poland are also required to:
a notify the PFSA of the commencement and cessation of business activity; and
b enable the authorised PFSA staff to perform their supervisory functions, in particular
by:
• making books of account, balance sheets, records, plans, reports and other
documents available to them;
• allowing them, on receipt of a written request, to make copies of such documents
and other information media; and
• providing explanations to any questions raised.
Furthermore, banks must provide to the central bank, at the request of the National Bank
of Poland, data necessary to assess their financial standing and the risks to the banking
system, and those banks that participate in monetary clearing and interbank settlements
must additionally provide data necessary for assessing the monetary clearing and interbank
settlements.
In recent years, the major focus of the PFSA continued to be the regulation of the
retail markets and the marketing of bank products to retail clients. The PFSA issued specific
recommendations with regard to the marketing of structured investment products by banks
as well as distribution of insurance products (bancassurance) and selling of long-term deposits
formally structured as insurance in order to avoid capital gains tax. The past year was also
dominated by discussions concerning the restructuring of mortgage loans denominated
in Swiss francs. Before the financial crisis, most long-term credits (in particular mortgage
loans) extended by the banks in Poland were denominated in foreign currencies (Swiss francs
or euros) in order to take advantage of lower interest rates and thus reduce the total cost
of credit; however, as most retail clients earn their wages in the Polish currency, they are
confronted with foreign-exchange volatility with almost no possibility of hedging against
that risk. In order to eliminate the foreign exchange risk, apart from the capital adequacy
measures, the PFSA requests that banks (1) inform their clients about the currency spread
and the associated risks, both prior to and during the credit relationship; (2) set the exchange
rate for the repayment of the loans at the same level as for other customers of the bank;
and (3) enable the repayment of the loan directly in the foreign currency acquired from a
different source than the lending bank. In the autumn of 2011 the Polish parliament allowed
consumers to repay loans and credits denominated in foreign currencies directly in cash in
that currency, and thus limited the additional source of income for the banks resulting from
the currency spreads. However, the issue has become very acute following the sudden rise

Poland
457
of the Swiss franc in mid-January 2015 due to the monetary policy decisions of the Swiss
National Bank and the resulting substantial increase of the value of the loans and credits
denominated in the Swiss francs. The issue of mortgage loans denominated in Swiss francs
has been vigorously debated throughout 2015. Banks and lenders presented their own ideas
for resolving the crisis. However, there were so many discrepancies between both parties,
in particular regarding bearing costs of the planned operation, that they did not manage to
reach a compromise. Eventually in January 2016 a draft law aimed at regulating the issue of
mortgage loans denominated in Swiss francs and other currencies has been presented by the
Chancellery of the President of the Republic of Poland. The draft involves the possibility
of conversion of mortgage loans denominated in Swiss francs and other foreign currencies
into Polish zlotys at a ‘fair’ exchange rate that will be calculated individually with relation
to each mortgage loan agreement. The draft provides for two modes of credit restructuring
for the banks: voluntary and compulsory. The voluntary procedure is based on the consent
of a bank to amend the mortgage loan agreement. However, if a bank does not agree to the
amendment, the client would be entitled to commence the repayment of his or her mortgage
loan at a fair exchange rate after submitting an appropriate statement to a bank. Moreover,
client would also be entitled to initiate the third restructuring mechanism (i.e., the transfer of
ownership of a real property to a bank in exchange for relief from the debt). Borrowers would
also be reimbursed for bank spreads. The reimbursement shall take place by the bank drawing
up a calculation of spreads and deducting the value of ‘unfairly’ collected spreads from the
outstanding amount of credit. It remains to be seen what the final version of this law will look
like and how it will influence the financial situation of Polish banks.
In 2015 the Act on macro-prudential supervision on financial system and
crisis management in the financial system entered into force. The competent body for
macro-prudential supervision on financial system and crisis management is the Financial
Stability Committee. In performing its tasks, the Committee cooperates with the European
Systemic Risk Board. The Financial Stability Committee is responsible for, inter alia,
identifying financial institutions posing material risk for financial system and the execution
of macro-prudential instruments, which includes presenting its opinion and issuing
recommendations on limiting systemic risk.
ii Management of banks
Following the implementation of CRD IV Directive which entered into force in
November 2015, Polish law provides for specific corporate governance requirements for
banks. Banks that operate as joint-stock companies are governed by general corporate law
with modifications originating from the Banking Law. The supervisory board of the bank
must comprise at least five persons and the management board must comprise at least three.
Banks must inform the PFSA of the composition and any changes in the supervisory or
management boards. The chairman of the management board of a bank is in charge of internal
audit. It should also be indicated which member or members of the management board are
responsible for supervising material risks for the bank’s activity. Such member or members of
the bank’s management board may not supervise the area of the bank’s activity generating that
risk. Moreover, it is not permissible to combine positions of the president of the management
board and the member of the management board in charge of supervising material risk.
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a bank should indicate persons responsible for supervising compliance with laws, internal
regulations and market standards as well as accounting and financial reporting, including
financial control.
The members of the management and supervisory board of a bank should have
knowledge, skills and experience relevant to their functions and duties as well as give an
adequate guarantee of due performance of their duties. In general, the number of functions
permitted for members of the management and supervisory board depends on individual
circumstances and the character, scale and degree of complexity of the bank’s activity. In case
of significant banks2
a member of the management and supervisory board may at the same
time perform the duties of member of no more than: (1) one management board and two
supervisory boards or (2) four supervisory boards. In certain situations the PFSA may give
consent to such member to perform the duties of one additional supervisory board.
Certain members of the management board of a bank (i.e., the chairman and the
member or members of the management board in charge of supervising material risk in
the bank’s activity) must be approved by the PFSA. Consent may be refused, inter alia, if
the candidate (1) has been convicted of an intentional or fiscal offence; (2) does not have
knowledge, skills and experience relevant to his or her functions and duties; (3) does not
give an adequate guarantee of due performance of his or her duties; or (4) cannot prove
sufficient knowledge of the Polish language (this last requirement can be waived if knowledge
of the Polish language is not necessary for prudential supervision, taking into account in
particular the level of permissible risk or the scope of the bank’s activity). This language
requirement has always prevented foreign nationals without sufficient command of Polish
from serving as board members of Polish banks; remarkably, in 2010 the PFSA for the first
time permitted two foreign nationals who do not speak Polish to assume responsibility for
a bank’s management. The consent of the PFSA is also necessary for the appointment of
the manager and deputy manager of a branch of a non-EU bank. The PFSA uses the same
criteria as described to evaluate candidates. There are no such requirements with respect to
the managing personnel of a branch of an EU credit institution or a representative office.
The PFSA may ask the relevant bank authorities (i.e., the meeting of shareholders
or the supervisory board) to dismiss any member of its management or supervisory board
who does not fulfil the requirements imposed by law. Moreover, the PFSA is also entitled
to suspend a member of the management or supervisory board of a bank until the relevant
bank authorities adopt a resolution on his or her dismissal. The PFSA is obliged to dismiss a
member of the management board of a bank in the event of final conviction of an intentional
or fiscal offence, with the exception of offences prosecuted by private prosecution as well as in
the event of failure to inform the PFSA of charges of an intentional or fiscal offence, with the
exception of offences prosecuted by private prosecution within 30 days of the presentation
of charges.
The articles of association of a bank shall specify the management system, which is a
set of principles and mechanisms relating to the decision-making processes and to evaluating
2 Significant banks are banks significant in terms of size, internal organisation or type, scope
and complexity of conducted business, which fulfil one of the following conditions: (1) its
shares are admitted to trading on a regulated market or whose share in (2) assets, (3) deposits
or (4) own funds of the banking sector is not less than 2 per cent or other banks deemed as
significant by the PFSA.

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banking activities. The management system comprises the risk management system and
internal control system. The management system must include the procedure of anonymous
reporting of violations of laws, internal regulations and ethical standards applicable to the
bank (whistleblowing). The procedure shall provide protection for whistleblowers against
retaliation, discrimination and other possible cases of unfair treatment.
Except for the general duties imposed on bank managers by corporate law, such as
duty of care and duty of loyalty, Polish banking law provides for specific legal and regulatory
duties of bank managers. Members of the management and supervisory board of a bank
are obliged to perform their functions honestly and fairly and to be driven by independent
judgements in order to provide efficient assessment and verification of making and enforcing
decisions connected with the current management of the bank. General corporate law also
governs the decision-making process within the bank – as the default rule, the management
board of the bank has broad discretion with respect to the conduct of the bank’s business.
However, the internal regulations (in particular articles of association) can impose restraints
and provide that, for example, certain credit commitments need to be authorised by the
supervisory board or the shareholders.
With the exception of state-owned banks, Polish law does not contain any restrictions
on bonus payments to management and employees of banking groups and this issue has
never been subject to closer scrutiny by the regulator. Unlike in the United Kingdom and the
eurozone countries, the topic of bonus payments in the financial industry was absent from
the Polish public discourse and the remuneration of high-level bankers was also not subject to
public scrutiny. This may be explained by the fact that during the financial crisis none of the
Polish financial institutions needed to be bailed out by the government, and at no time was
there a risk of collapse of the financial sector. As of March 2016, except for the state-controlled
banks, Polish law also does not provide any limitations on the amount of remuneration that
the managers of a Polish bank can receive. However, following the implementation of the
CRD IV Directive the banks are obliged to draw up and implement remuneration policies for
the categories of persons whose professional activity has a significant impact on the risk profile
of the bank. The remuneration policy applies to the bank’s subsidiaries and should be in line
with the remuneration policy adopted by the dominant entity of the bank. Every year, the
banks shall provide the PFSA with the information about persons whose professional activity
has a significant impact on the risk profile of the bank and whose total remuneration for the
previous year amounted to at least the equivalent of €1 million. A remuneration committee
composed of members of the supervisory board should be established in significant banks.
The task of the remuneration committee is assessing and monitoring the remuneration policy
as well as supporting bodies of the bank in shaping and implementing this policy.
In 2013 the PFSA began to scrutinise the corporate governance of the banks.
Notwithstanding the corporate governance code of the Warsaw Stock Exchange, on which
the major Polish banks are listed, in January 2014 the PFSA issued its own corporate
governance rules for financial institutions and requested compliance therewith by the end
of 2014. Failure to comply with the PFSA’s rules is taken into account by the PFSA in the
regulatory assessment of the supervised entities. Although this initiative has faced significant
criticism from market participants, generally the supervised entities have decided to comply
with the PFSA’s rules (in whole or with some exceptions).

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iii Regulatory capital and liquidity
On 1 January 2014 the CRD IV package entered into force. The CRR Regulation is directly
applicable in Poland, whereas the CRD IV Directive needed to be implemented into Polish
law and this was done in November 2015. Following the implementation of the CRD IV
Directive, relevant provisions of the Banking Law regarding banks’ own funds, internal
capital and capital adequacy have been amended. It is still necessary to repeal the PFSA
resolutions, which became obsolete as a result of the direct application of the CRR Regulation
and the implementation of the CRD IV Directive. In order to complete the establishment
of new legal frameworks the Minister of Finance needs to issue several ordinances specifying
particular questions relating to the regulatory capital (e.g., regarding the detailed way of
assessing internal capital by banks).
The entry into force of the CRR Regulation and the implementation of the CRD
IV Directive resulted in material changes to the structure of banks’ own funds, which were
previously regulated solely by provisions of the Polish Banking Law. Currently banks must
maintain own funds defined as the sum of Tier 1 and Tier 2 capital, adjusted to the size
of conducted business. Capital instruments and subordinated loans may be qualified as
additional instruments in Tier 1 or instruments in Tier 2 after obtaining the consent of the
PFSA.
Banks are required to maintain the sum of own funds at a level not lower than the
higher of: (1) the amount resulting from the fulfilment of requirements regarding own
funds specified in provisions of the CRR Regulation,3
and (2) the amount estimated by the
bank, necessary to cover all identified, material risks appearing in the bank’s activity and
changes in the economic environment, taking into account the expected level of risk (the
internal capital). Banks are obliged to draw up and implement strategies and procedures of
estimating and constantly maintaining the internal capital. On demand of the PFSA, banks
are required to provide information regarding the structure of own funds and the fulfilment
of requirements and norms specified in the Banking Law and the CRR Regulation.
In addition, banks are obliged to maintain capital buffers, in particular the safeguarding
and countercyclical capital buffer. Additional capital in the form of countercyclical buffer
is collected by banks in the period of economic growth and is aimed at weakening credit
expansion of banks, which shall result in smoothing the cycle fluctuations. During the
economic downturn, banks will be exempt from the requirement to maintain countercyclical
buffer capital and additional capital accumulated by them during the period of economic
growth will be able to be used.
The PFSA may recommend a bank to comply with additional requirements relating to
liquidity and own funds as well as order a bank to withhold the payment of dividend until the
restoration of liquidity or achieving other norms of risk permissible in the bank’s activity. The
PFSA is also entitled to impose on a bank additional requirement relating to own funds or to
impose applying higher factors than previously adopted in case of significant irregularities in
identifying risk with the use of internal method of calculating own funds. In 2015 the PFSA
3 Subject to Article 92 of the CRR Regulation, banks shall at all times satisfy the following
own funds requirements: (1) a Common Equity Tier 1 capital ratio of 4.5 per cent, (2) a Tier
1 capital ratio of 6 per cent, and (3) a total capital ratio of 8 per cent.

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imposed additional capital requirements on banks with significant exposures on mortgage
loans in foreign currencies. It is likely that the PFSA will also issue recommendations relating
to the payment of dividends.
Generally, in 2015 Polish banks were well capitalised. Own funds of Polish banks
calculated as the sum of Tier 1 and Tier 2 capital increased from 136.8 billion zlotys at the
end of 2014 to 149.2 billion zlotys at the end of Q3 2015. The increase resulted from, inter
alia, the suspension of the payment of dividends. The total capital ratio of Polish banks
increased from 14.7 per cent at the end of 2014 to 15.6 per cent at the end of Q3 2015.
Poland has not adopted any bank holding regulations that would restrict the
permissible activities of bank holding companies. According to information from the
European Commission, so far no financial conglomerates have been identified in Poland,
thus the provisions regarding the supplementary supervision over financial conglomerates
remain a paper exercise. If a Polish bank operates in a holding company, supervision over
such entity is exercised on a consolidated basis. Polish banking law contains a set of default
rules on the selection of the consolidated supervisor depending on the type of the holding
and home country of the parent company.
The PFSA was empowered to set liquidity and other permissible operating
risk standards binding on banks. Resolution No. 386/2008 of the PFSA from
17 December 2008 on mandatory bank liquidity standards imposed minimum quantitative
and qualitative requirements for the management of liquidity risk by banks. In particular,
banks were required to monitor the mismatch of the maturity dates, forecast the inflow
and outflow of funds, determine the impact of their affiliates on their liquidity and analyse
the possibilities of obtaining future financing and its costs as well as implement short-term
(unstable sources of funding cover liquid assets) and long-term (coverage of non-liquid assets
and limited liquidity assets with stable sources of funding) liquidity measures. In 2015 the
above-mentioned national rules concerning liquidity requirements were replaced by the
liquidity coverage ratio specified in the CRR Regulation and the Commission Delegated
Regulation 2015/61 of 10 October 2014 to supplement the CRR Regulation with regard
to liquidity coverage requirement for credit institutions. Consequently, currently banks
shall hold liquid assets, the sum of the values of which covers the liquidity outflows less the
liquidity inflows under stressed conditions so as to ensure that institutions maintain levels of
liquidity buffers which are adequate to face any possible imbalance between liquidity inflows
and outflows under gravely stressed conditions over a period of 30 days. During times of
stress, banks may use their liquid assets to cover their net liquidity outflows. The liquidity
coverage ratio shall be introduced gradually and shall reach the target level of 100 per cent as
from 1 January 2018.
iv Recovery and resolution
At the time of writing neither the Banking Law nor the PFSA require banks in good financial
standing to draw up recovery and resolution plans (living wills). The management board of
a Polish bank is, however, required to immediately notify the PFSA that a bank is suffering a
net balance sheet loss or is threatened with such a loss, or that there is a threat of its insolvency
or loss of liquidity, and present to the PFSA a reorganisation plan. Failure to perform such
actions may result in an order of the PFSA to initiate reorganisation proceedings by a bank.
During the reorganisation proceedings, all profits earned by the bank are first used to cover
the losses, and subsequently to increase the bank’s own funds. The implementation of the
reorganisation plan may be supervised by a custodian appointed by the PFSA, who can

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participate in meetings of the bank’s governing bodies, obtain any information necessary
to perform his or her duties, and file objections against resolutions and decisions of the
management board and the supervisory board of the bank (a statement on the intention to
file an objection made by the custodian during a supervisory board meeting or a management
board meeting suspends the performance of the resolution or decision).
If the management board of the bank does not provide a reorganisation plan, or
if the implementation of the plan proves ineffective, the PFSA may decide to establish a
receivership administration while the reorganisation plan is being implemented. The
receivership administrators prepare and agree the reorganisation plan with the PFSA and
direct the implementation thereof. In particular, pursuant to the Banking Law during the
receivership proceedings the right to adopt resolutions and make decisions in all matters
vested by law or by the statute with the bank’s authorities and governing bodies is transferred
to the receivership administrators. Upon establishing the receivership administration, the
supervisory board is suspended, members of the management board are automatically
recalled and previously established commercial proxies and powers of attorney expire. For
the duration of receivership administration, the rights of other bodies of the bank are also
suspended. Receivership administrators may close the bank’s ledgers and prepare a financial
statement of the bank for the day indicated by the PFSA, as well as adopt a resolution on the
coverage of loss for the period ending on that day, and a loss from previous years.
It needs to be stressed that the reorganisation plans and the receivership administration
are always implemented by the PFSA in the utmost confidentiality and the information that
banks are required to provide is not released to the public. It is only possible to evaluate
indirectly which banks were affected by those supervisory measures, for example, by
comparing their balance sheets or solvency ratios from year to year. Only the total number
of banks being subject to reorganisation plans is easily available. As of January 2016, seven
commercial banks and 35 cooperative banks have been subject to the reorganisation plans
by the PFSA.
The legal framework for ‘bail-in’ powers of the Polish government in a crisis situation
is provided in the Act on recapitalisation of certain financial institutions. This Act, which is
applicable, inter alia, to banks, allows the Polish government either to guarantee the increase
of own funds by a financial institution or to acquire shareholding in a bank by compulsory
acquisition of shares from its current shareholders. The guarantee issued by the Polish state
is triggered when the shares or bonds issued by a bank are not acquired by the existing
shareholders or third parties and can only be extended if the PFSA had first approved the
reorganisation plan. If there is a danger that a financial institution will lose its solvency, the
government is further empowered to take over the failed institution. The Polish state acquires
control by the compulsory acquisition of shares from the current shareholders. That said, as
of March 2016, Polish banks remain well capitalised and the Act on recapitalisation of certain
financial institutions has never been tested in practice.
Notwithstanding the above, it is expected that in 2016 the implementation of the
Bank Recovery and Resolution Directive (BRRD) will enter into force and this will result in
far-reaching changes to the recovery and resolution regime. The new law will introduce the
mechanism of compulsory restructuring. The body responsible for compulsory restructuring
will be the Bank Guarantee Fund. In performing its functions relating to compulsory
restructuring the Bank Guarantee Fund will be cooperating with the PFSA, the National
Bank of Poland and the Minister of Finance. The aim of compulsory restructuring will be,
inter alia, to maintain financial stability, in particular by protecting the confidence in the

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financial sector and ensuring market discipline and protecting funds entrusted to banks
by their clients. The Bank Guarantee Fund will draft compulsory restructuring plans for
each bank. However, the banks will be obliged to provide the Bank Guarantee Fund with
assistance in drafting and updating the plans, if the Bank Guarantee Fund requests them to
do so. If a bank refuses to provide assistance, the Bank Guarantee Fund will be entitled to
impose on the bank a penalty of up to 10 per cent of the projected annual turnover of the
bank, however not exceeding 100 million zlotys. After the implementation of the BRRD,
banks will be obliged to maintain the level of own funds and liabilities subject to redemption
or conversion determined by the Bank Guarantee Fund.
The compulsory restructuring proceedings will be conducted by the Bank Guarantee
Fund after receiving information of the threat of insolvency of a bank from the PFSA. In the
course of compulsory restructuring proceedings the Bank Guarantee Fund will be entitled to
use the following instruments:
a the acquisition of enterprise (i.e., the Bank Guarantee Fund will be entitled to issue
the decision on the acquisition of a bank’s enterprise or its organised part by another
entity);
b the bridge institution (i.e., the Bank Guarantee Fund will be entitled to set up a
bridge institution in the form of a capital company; the aim of the bridge institution’s
activity would be: (1) managing the acquired share rights in bank under restructuring
and exercising rights thereof, or (2) continuing the activity of the acquired enterprise
of the bank under restructuring or its organised part until the disposal to a third party
or liquidation thereof);
c the redemption or conversion of liabilities (i.e., the Bank Guarantee Fund will be
entitled to (1) redeem or convert liabilities in order to recapitalise the bank under
restructuring, (2) redeem or convert liabilities transferred to a bridge institution in
order to equip it with own funds, (3) redeem or convert liabilities transferred under
the instrument of the separation of property rights, or (4) redeem liabilities under the
instrument of the acquisition of enterprise); and
d the separation of property rights (i.e., the Bank Guarantee Fund will be entitled to set
up an entity in the form of a capital company and transfer to that newly established
entity separated property rights and liabilities of a bank under restructuring or a bridge
institution; the separation of property rights will be permissible if: (1) the liquidation
thereof could adversely affect the market situation, (2) the transfer thereof is necessary
for continuing the activity of a bank under restructuring or a bridge institution, or (3)
the transfer of property rights shall increase the revenues from those property rights).
If the application of the above-mentioned instruments of restructuring does not lead to
the disposal of the bank under restructuring or the application of those instruments is not
possible, the bank under restructuring shall be subject to liquidation through insolvency
proceedings. It should be noted that during the compulsory restructuring proceedings the
right to adopt resolutions and make decisions in all matters vested by law or by the statute
with the bank’s authorities and governing bodies will be transferred to the Bank Guarantee
Fund. The Bank Guarantee Fund will be entitled to appoint an administrator of the bank
under restructuring who will be exercising those powers in its name.
Banks will be required to pay contributions to a compulsory restructuring fund, from
which the actions of the Bank Guarantee Fund under compulsory restructuring proceedings
will be financed.

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IV CONDUCT OF BUSINESS
Banks in Poland have to follow consumer protection rules with regard to consumer credit and
the distance marketing of consumer financial services, as provided in the laws implementing
the EU directives. With respect to usury laws, the Polish Civil Code introduces a cap on the
maximum amount of interest that can result from a legal act – the interest rate cannot exceed
double the sum of the reference interest rate of the National Bank of Poland and 3.50 per
cent. The reference rate is currently set at 1.50 per cent, so that the maximum interest charged
by banks cannot exceed 10 per cent annually. Any agreements to the contrary, or attempts to
circumvent the usury law, are null and void. In 2016 the legislation setting limits on the costs
other than interest charged on the consumers which is applicable to banks came into force.
The costs shall not exceed 25 per cent of the amount of borrowed cash and shall not exceed
30 per cent of the amount of borrowed cash per year. Additionlly, the non-interest costs
throughout the whole crediting period shall not exceed the total amount of the consumer
loan (which also refers to consumer credits advised by banks).
As far as investment services provided by banks are concerned, banks in Poland must
comply with specific provisions resulting from the implementation of MiFID imposing
certain pre-contractual disclosure requirements and suitability of financial products. Bank
providing investment services are obliged to, inter alia, provide certain information to clients
or potential clients, such as information on their services, on financial instruments, on costs
and charges as well as obtain the necessary information regarding the clients’ knowledge and
experience in order to assess the suitability of financial service or product.
Banks, banks’ staff and other persons involved in the performance of banking
operations are subject to far-reaching banking secrecy requirements. As a rule of thumb,
information that is subject to banking secrecy may be disclosed when, due to the nature
of a banking operation or the regulations in force, proper performance of the agreement
under which the banking operation is performed, or proper execution of activities related
to the conclusion and execution of the agreement, are not possible without the disclosure
of information that is subject to the secrecy obligation. The Banking Law further provides
for a detailed, illegible and poorly drafted catalogue of circumstances in which banking
secrets may be divulged to other financial institutions and public authorities. Depending
on circumstances, alongside the banking secrecy, the banks may also be required to follow
general data protection laws, which also impose restrictions on disclosure of personal data of
retail clients. In 2016 a regulation imposing an obligation on banks to provide institutions
established to collect, process and provide information subject to the obligation of banking
secrecy (the most important of which is Biuro Informacji Kredytowej SA established by
leading Polish banks and the Association of Polish Banks) with information on their clients’
liabilities in the scope needed to extend loans, cash advances, bank guarantees and other
guarantees as well as to assess the credit worthiness of customers will come into force. The
aim of this regulation is to increase the possibility of assessing the creditworthiness of banks’
clients. However, the performance of this obligation may be burdensome for banks, as it
refers to all liabilities without any exclusions.
Banks are subject to general liability rules in tort and in contract. When assessing the
non-performance of obligations by banks, the courts employ the high standard of review and
demand that the banks act with the standard of care expected from a professional body. This
high standard of care is particularly imposed in the growing number of judicial decisions
concerning the defective performance of wire transfers, where the courts regularly hold that
the professional character of banks requires that they cross-check the wire instructions of the

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client with the recipient’s data. Further, activities of the Polish Office of Competition and
Consumer Protection need to be noted – banks are subject to increased scrutiny on antitrust
grounds, inter alia, with respect to interchange fees, spreads on foreign currencies, as well as
mis-selling practices.
Moreover, it should be noted that due to the provisions of the Act on reviewing
complaints by financial market entities and the Financial Spokesman, banks are obliged to
review complaints of their clients within 30 days. Only complaints in especially complicated
cases may be reviewed within 60 days. In case of failure to comply with provisions relating
to reviewing complaints, the Financial Spokesman may impose on a bank a penalty of up to
100,000 zlotys.
V FUNDING
Banks participating in SORBNET 2 – a real-time gross settlement system operated by
the National Bank of Poland – may cover their liquidity shortages with an intraday credit
extended by the central bank. A significant number of commercial banks also participate
in the TARGET2 system, either directly or as indirect participants. In 2012, Krajowa
Izba Rozliczeniowa SA, a payment and settlement intermediary created in 1991 through
an initiative of the major Polish commercial banks, the National Bank of Poland and the
Association of Polish Banks, launched a new payment and settlement system – Express
ELIXIR – that provides for an immediate processing of the wire transfers 24/7 between the
participating banks.
During the financial crisis, interbank lending was heavily disrupted and still continues
to stagnate.To limit the liquidity risk of banks, the National Bank of Poland adopted a package
of measures aimed at facilitating its requirements for open market operations. In particular,
repo transactions between commercial banks and the National Bank of Poland may be entered
into for longer periods (six months instead of three), and the list of eligible collateral has
been extended to include debentures issued by local authorities, mortgage-backed debentures
and treasury papers denominated in euros. The National Bank of Poland also lowered the
mandatory reserve requirements for banks and agreed to repurchase its own debentures prior
to their maturity date. Those instruments proved to be sufficient during the crisis, as no bank
was forced to ask the National Bank of Poland for individual liquidity assistance.
VI CONTROL OF BANKS AND TRANSFERS OF BANKING BUSINESS
i Control regime
The Banking Law states that an entity that intends to take up or acquire shares or rights
on shares in a domestic bank, directly or indirectly, in an amount that would result in that
party being entitled to equal to or more than 10 per cent, 20 per cent, one-third or 50 per
cent of the total number of votes at a general meeting or of the share capital of a bank, is
required to notify the PFSA each time of its intention to take up or acquire such shares.
Moreover, an entity that intends to, directly or indirectly, become a dominant entity of a
bank in a way different than by taking up or acquiring shares or rights on shares in a domestic
bank in the amount guaranteeing the majority of votes at the general meeting, is required
to notify the PFSA each time of such intention. The notifying entity may accomplish the
intention expressed in the notification when the PFSA does not deliver an objection within

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60 working days from the day of the receipt of the notification and all required information
and documents or the PFSA issues a decision citing lack of grounds for filing an objection.
The PFSA shall file an objection by way of an administrative decision, against taking up or
acquisition of shares or rights on shares or becoming a domestic bank’s dominant entity, if:
(1) the notifying entity has not remedied defects in the notification or in the documents or
information enclosed thereto, (2) the notifying entity did not submit in time the additional
information or documents required by the PFSA, or (3) this is justified by the requirement
of cautious and stable management of a domestic bank or due to assessment of the notifying
entity’s financial standing. As far as assessing the notifying entities’ financial standing is
concerned, PFSA representatives have made it clear in their public statements that an entity
that needs to improve its solvency ratios in its home jurisdiction in order to meet Basel III
requirements would not be considered favourably by the regulator as a potential acquirer of
a Polish bank.
When performing the assessment whether filing an objection is justified by the
requirement of cautious and stable management of a domestic bank or due to the assessment
of the notifying entity’s financial standing, the PFSA takes into consideration, in particular,
commitments regarding the domestic bank and prudential and stable management of the
bank undertaken by the notifying entity in connection with the conducted procedure. The
commitments may be of various kinds. For example, they may refer to the positioning of a
domestic bank in the structure of a multinational financial group or dual-listing of the shares
of the bank’s dominant entity on the Warsaw Stock Exchange. Although the commitments
are formally made voluntarily, in practice the PFSA often expresses its expectations and
suggestions relating thereto. For instance, in 2012, the PFSA, during assessment of an
acquisition, requested notifications from the purchasers that they undertook to dual-list their
shares on the Warsaw Stock Exchange. Such commitments were made by Santander (in the
acquisition of Kredyt Bank) and Raiffeissen (in the acquisition of Polbank). According to
the PFSA, the owners of the key financial institutions in Poland should also be subject to
increased transparency and capital market information requirements in Poland.
Where shares or rights on shares are taken up or acquired (1) in breach of the
obligation of notifying the PFSA, (2) despite the objection having been filed by the PFSA,
(3) before the end of the period authorising the PFSA to file the objection, or (4) after the
end of the time limit set by the PFSA for taking up or acquisition of shares or rights on shares,
voting rights on those shares may not be exercised. In case of exercising powers of a dominant
entity of a domestic bank in the aforementioned manner, members of the management
board of a domestic bank appointed by the dominant entity or those who are members of
the management board, proxies or persons performing managerial functions at a dominant
entity, are not allowed to participate in actions considered as representation of a domestic
bank; where it is impossible to establish the board members who have been appointed by
a dominant entity, the appointment of the management board shall be ineffective since the
day of obtaining powers of a dominant entity of that domestic bank. In particularly justified
cases, inter alia, if the interests of domestic bank’s customers so require, the PFSA may, by
way of a decision issued at the request of a shareholder or a dominant entity of a domestic
bank, release the above-mentioned prohibitions.
In certain cases the PFSA may, by decision, prohibit execution of voting rights in
shares of a domestic bank or execution of powers of a dominant entity of a domestic bank.
This may happen, inter alia, in the event of failure to respect the commitments made in
the proceedings regarding taking up or acquiring shares or rights on shares in a domestic

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bank or becoming its dominant entity. The aforementioned decision may be followed by a
decision of the PFSA ordering disposal of shares of a domestic bank within a fixed time. If the
shareholder does not fulfil the obligation to dispose of the shares within the prescribed time,
the PFSA is entitled to impose on a domestic bank’s shareholder being a natural person a fine
of up to 20 million zlotys and on a shareholder being a legal person a fine of up to 10 per
cent of its annual turnover. These regulations have not been used in practice for a long time.
However, in 2014 for the first time the PFSA prohibited a private equity fund, Abris Capital
Partners, from executing voting rights on shares in FM Bank PBP and ordered the disposal
of the shares due to the failure to respect the investor’s commitments. Moreover, in 2015 the
PFSA initiated proceedings against Raiffeisen Bank International on prohibition of execution
of voting rights on shares of Raiffeisen Bank Polska. It remains to be seen whether the PFSA
will use this tool more readily.
ii Transfers of banking business
Pursuant to the Banking Law, subject to authorisation from the PFSA, banks may divide by
transfer of some assets of a bank being divided to an existing or to a newly formed domestic
bank or an EU credit institution (spin-off or division by separation). The PFSA shall refuse
its authorisation if the division may turn out to be detrimental to the sound and prudent
management of the bank being divided or the banks to which the assets of the bank being
divided are transferred, or if the division may cause substantial loss to the national economy
or to the Polish national interest. The division of a bank is considered to be effected as a
universal succession and does not require the consent of the consumers.
Banks may also use other techniques to transfer part of their business. The acquisition
of a banking enterprise or an organised part thereof by a bank requires authorisation from
the PFSA. In this case, there is assignment of the entire contract, and customers’ consent may
be necessary. Banks may also employ other techniques to achieve capital relief on assets, such
as true sale securitisation (i.e., assignment of the individualised claims on a special purpose
vehicle – assignment of claim does not require the consent of the debtor, unless the contract
provides otherwise) and synthetic transfer (such agreement may, however, only be effectuated
with a mutual fund that constitutes a securitisation fund or with a securitisation fund –
there is no legal transfer of the underlying assets so the consent of clients is not necessary).
Moreover, Polish law allows for the sale of non-performing loans in a public tender where
the banks can publicly disclose to the potential acquirers certain information that is normally
subject to banking secrecy rules.
It is also worth mentioning that a bank may merge only with another bank or an EU
credit institution upon authorisation from the PFSA. The PFSA shall refuse its authorisation
if the merger would lead to the violation of law, the interests of customers of the bank
participating in the merger or would jeopardise the safety of funds held in that bank.
VII THE YEAR IN REVIEW
The financial results of the Polish banks in Q1–Q3 2015 were 11.9 per cent worse than in
the same period of 2014 (the net results of the Polish banks in Q1–Q3 2015 amounted to
11.4 billion zlotys, which was 1.5 billion less than in Q1–Q3 2014). The deterioration of
the financial results of the Polish banking sector was caused mainly by the significant decline

Poland
468
of the interest income due to the reduction of interest rates by the National Bank of Poland.
The other major reasons were the decrease of intercharge fees and growth of the contributions
paid by banks to the deposit guarantee scheme.
In 2015 the CRD IV Directive was implemented into Polish law and intensive work
on the new regulation framework for the deposit guarantee scheme and the implementation of
the BRRD has been undertaken. The new legislation (already in force and to be implemented)
will influence the conditions of conducting banking business in Poland.
The past year witnessed continuing development in the area of consumer protection.
The PFSA reported a large number of complaints filed by consumers against financial
intermediaries. The complaints to the regulator were about the quality of service and products
offered by the banks, in particular, consumer loans and mortgages. The problems reported
concerned the lack of or inadequate information about products and services, inappropriate
servicing of products, lack of adequate communication with consumers and seizure of
accounts during enforcement proceedings. As regards the cross-selling of insurance products
by banks, the PFSA has addressed the issue of proper bancassurance practice in a formal
Recommendation U. Recommendation U was to be implemented by banks by the end of
March 2015. Recommendation U extensively addresses conflicts of interest and forbids the
banks to gain profits from the marketing of the insurance protection when the bank also
enjoys the insurance coverage which is financed by its consumer. The entry into force of
Recommendation U curbed the profits derived by the banks from the sale of credit coupled
with insurance products and increased the protection of consumers. The level of consumer
protection was also increased by introducing new rules for financial institutions for reviewing
clients’ complaints and the appointment of the Financial Spokesman.
The increased number of consumer complaints has also resulted in increased litigation,
often in the form of class action litigation. In particular, mortgage loans denominated in
foreign currencies have become the subject of increasing class actions against banks. In
the first of such proceedings, the Regional Court in Łódź ruled against BRE Bank SA (a
subsidiary of Commerzbank; currently operating under the business name mBank SA),
finding that its general terms and conditions regarding currency spreads were abusive. The
judgment was then upheld by the Appellate Court in Łódź. However, the Supreme Court
shared one of the arguments of procedural nature presented in the cassation appeal filed by
the bank and remanded the case for re-examination by the Appellate Court. Consequently,
the final outcome of this case remains to be seen. Other banks have also been threatened with
similar proceedings. It is worth mentioning the judgment issued by the Regional Court in
Wrocław against one of the Polish banks in which the court stated that the changes of interest
on credit cannot be in the bank’s absolute discretion. Another area of litigation concerns the
practices of banks in the area of insurance. The past year also witnessed increased activity
from the Office of Competition and Consumer Protection, which issued several decisions
against banks claiming that the structure of the banking products is abusive and infringes the
collective consumers’ interests.
In 2015 some Polish banks continued their intensive cooperation with
telecommunication companies aimed at the development of mobile banking and offering
certain banking services through mobile devices. Such cooperation seems to be a permanent
trend.
The unexpected decision in January 2015 of the Swiss National Bank to abandon
its currency ceiling against the euro resulted in the significant and sudden rise of the value
of the Swiss franc. This in turn resulted in the substantial increase of the instalments of the

Poland
469
loans denominated in the Swiss currency. As a result, many borrowers found themselves in
a difficult situation. The issue of finding the best way of helping them has been vigorously
discussed throughout 2015 (it was one of the main topics during the 2015 presidential and
parliamentary campaigns in Poland). The banks, the borrowers and the PFSA presented their
ideas on solving the issue. In particular, the PFSA came up with the idea of mitigating the
problem in a way that would both ease the borrowers and not affect the solvency of the Polish
banking sector. However, the expectations of banks and borrowers have been so divergent
that it made it impossible to find a solution acceptable to all parties. A draft law aimed at
regulating the issue of mortgage loans denominated in Swiss francs has been prepared under
the auspices of the Chancellery of the President of the Republic of Poland. However, it
remains to be seen what the final version of this law will look like. In this context it should
be noted that in 2016 the Act on support for borrowers in difficult financial situations who
took out mortgage loans will come into force. Under this Act the banks with exposure on
mortgage loans shall be obliged to make payments to the fund for supporting borrowers. The
fund will be administered by Bank Gospodarstwa Krajowego, which is the only state bank in
Poland. In general, each borrower (i.e., not only having mortgage loans denominated in Swiss
francs) facing financial problems will be entitled to receive, for a total of 18 months, financial
support of up to 1,500 zlotys per month. The support will have to be reimbursed by the
borrower. The Act is addressed to borrowers having temporary problems with the repayment
of mortgage loans, regardless of the currency in which it was incurred. The obligation to
make payments to the fund for supporting borrowers will increase the costs of conducting
banking business.
As a result of the suspension of activity by the PFSA and subsequent declaration
of bankruptcy by the court of Spółdzielczy Bank Rzemiosła i Rolnictwa w Wołominie
(conducting its business activity under the name SK Bank), banks participating in the
Polish deposit guarantee scheme were obliged to make payments in the aggregate amount of
2 billion zlotys to satisfy the depositor’s claims. It will adversely affect the financial results of
Polish banks in 2015.
In 2015 the Constitutional Tribunal held that conducting enforcement procedures
by banks by way of issuing bank enforcement orders was unconstitutional. Thanks to the
possibility of issuing bank enforcement orders on the basis of their books or other documents
related to the performance of banking operations, in order to collect their receivables banks
did not have to bring proceedings to the court. A bank enforcement order could constitute
the basis for an enforcement procedure conducted pursuant to the provisions of the Polish
Code of Civil Procedure following a writ of execution issued by a court. However, the court
was verifying only the formal correctness of bank enforcement orders, without examining
the merits. Such procedure made the collection of receivables by banks relatively fast and
easy. The Constitutional Tribunal found that conducting enforcement procedures by banks
by way of issuing bank enforcement orders was against the principle of equal treatment
arising out of the Constitution of the Republic of Poland. As a result of the judgment, the
provisions of the Banking Law regarding the issuing of bank enforcement orders have been
repealed. Consequently, collecting of receivables by banks without the possibility of issuing
bank enforcement orders will be more burdensome and time-consuming.

Poland
470
VIII OUTLOOK AND CONCLUSIONS
The biggest challenge facing the Polish banking industry in 2016 will certainly be compliance
with the new legislation already in force and to be implemented. The conditions of conducting
banking business have significantly changed, in particular due to the implementation of the
CRD IV Directive, the cancellation of bank enforcement orders, the new rules on reviewing
clients’ complaints, the expected implementation of the BRRD and amendments to the
deposit guarantee scheme. The biggest changes await the sector of cooperative banks as
cooperative banks will begin functioning in the form of institutional protection schemes
created in order to meet capital and solvency requirements imposed by the CRR Regulation.
In February 2016 the Act on tax on certain financial institutions came into force,
pursuant to which, inter alia, domestic banks, branches of foreign banks and branches of
EU credit institutions are obliged to pay additional tax amounting to 0.0366 per cent of
their assets exceeding 4 billion zlotys. It remains to be seen what the exact consequences
for Polish banks of the abovementioned tax will be, as well as of the costs to be incurred by
banks in connection with the expected conversion of mortgage loans denominated in Swiss
francs and other currencies into Polish zlotys. In particular, it remains to be seen whether
these additional burdens imposed on banks will result in a reduction in lending, which could
adversely affect the whole Polish economy.
In April 2016 the new rules of the Polish Office of Competition and Consumer
Protection pronouncing the provisions of standard form contracts illicit and the prohibition
of misselling of financial services will enter into force.

659
Appendix 1
ABOUT THE AUTHORS
TOMASZ GIZBERT-STUDNICKI
T Studnicki, K Płeszka, Z Ćwiąkalski, J Górski Spk
Tomasz Gizbert-Studnicki is a senior partner and co-founder of the firm. He is a tenured
professor at the chair of legal theory at the Law Faculty of the Jagiellonian University.
Professor Studnicki specialises in banking and corporate law, including MA deals and their
financing. In his practice, Professor Studnicki has represented SPCG’s clients in several dozen
transactions in this field.
TOMASZ SPYRA
Tomasz Spyra is a partner in the firm. He is admitted as a legal adviser in Poland. He advises
Polish and foreign banks in the field of banking law, antitrust regulations, large credit
facilities, as well as restructurings of receivables and insolvency. He is the author of numerous
publications in the field of banking and insolvency law and co-author of the leading
commentary on banking law. Dr Spyra is also a research fellow in the Polish–German Centre
for Banking Law at the Jagiellonian University.
MICHAŁ TOROŃCZAK
Michał Torończak is an associate in the firm’s banking practice. He is an advocate admitted to
the Warsaw Bar of Advocates. Dr Michał Torończak is a lawyer and economist. He specialises
mainly in banking and capital markets law. Dr Torończak is the author of several publications
on banking law.

About the Authors
660
T STUDNICKI, K PŁESZKA, Z ĆWIĄKALSKI, J GÓRSKI SPK
ul. Jabłonowskich 8
31-114 Cracow
Poland
Tel: +48 12 427 24 24
Fax: +48 12 427 23 33
spcg@spcg.pl
www.spcg.pl

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