Regulatory and Legal Environment

New legal and regulatory solutions, which became binding in 2018, had an impact on the financial and organizational position of the PKO Bank Polski SA Group and on the financial sector.

Annual report
2018

Save Delete Close

LEGAL AND REGULATORY SOLUTION	IMPACT
Prudential and Capital Requirements
The Act on Macroprudential Supervision over the financial system and on crisis management (Journal of Laws of 2017, item 1934, as amended), which among other things increased the security buffer from 1.25 to 1.875% as of 1 January 2018; the Decree of the Minister of Development and Finance from 2017 on the systemic security buffer (Journal of Laws of 2017, item 1776), which introduced the systemic risk buffer at the level of 3% as of 1 January 2018; Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms, EBA technical standards and recommendations of the Polish Financial Supervision Authority which, among other things, increased the short-term liquidity coverage ratio LCR for 2018 to 100% from 80% in 2017.	Increase in requirements regarding banks’ equity and liquidity
New Accounting Standard IFRS 9
International Financial Reporting Standard IFRS 9 Financial Instruments has replaced IAS 39 as of 1 January 2018 and determined the manner of measuring financial instruments (including calculations of allowances for expected credit losses) and their classification.	Influence on the banks’ financial results (including through the level of allowances), cost of risk, equity
Housing for the Young (Mieszkanie dla Młodych – MDM)
The Act of 27 September 2013 on State aid in the purchase of the first apartment by the young (Journal of Laws of 2013, item 1304), pursuant to which the “Mieszkanie dla Młodych” government program was extinguished. On 4 January 2018 Bank Gospodarstwa Krajowego stopped accepting the last pool of applications for co-financing the purchase of apartments. Officially, the government program was extinguished as at the end of 2018.	Limiting the banks’ lending action (housing loans)
Investor/Customer Protection
Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (MiFIR) and Directive of the European Parliament and Council 2014/65/UE of 15 May 2014 on markets in financial instruments, which establish new requirements for the provision of financial services by banks and investment companies. The regulation will be applied as of 3 January 2018. MiFID II has been implemented to Polish law by the Act of 1 March 2018 on changes in the Act on trading in financial instruments and certain other acts (Journal of Laws of 2018, item 685); Regulation (EU) No. 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs), which introduced rules for developing documents which include key information on retail collective investment and investment-linked insurance products; The Act of 10 May 2018 which amends the Act on Personal Data Protection (Journal of Laws of 2018, item 1000, as amended) and Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, which establishes several new duties on data processors as of 25 May 2018; Act of 30 November 2016 on amending the act on payment services and certain other acts (Journal of Laws of 2016, item 1997), which – among other things – introduces free-of-charge and generally accessible basic bank accounts and determines uniform principles for transferring payment accounts (implementation of the PAD directive); Act of 23 March 2017 on mortgage loans and on supervision over mortgage loan intermediaries and agents (Journal of Laws of 2017, item 819, as amended), which imposes additional information requirements on banks related to agreements concerning the reference rate, including informing Customers of potential consequences of applying it, as of 1 July 2018; the Act of 10 May 2018 on amending the act on payment services and certain other acts (Journal of Laws of 2018, item 1075) which introduces – among other things – a legal framework for the operations of payment services providers – a payment initiation service, PIS – and an account information service – AIS; Act on insurance distribution which imposed additional duties, including information duties, on insurers as of 1 October 2018 (implementation of the IDD Directive).	Influence on the product distribution model, net commission income, banks’ and banks’ group companies’ operating expenses and their product offer
Combating money laundering and terrorist financing
Act on combating money laundering and terrorist financing (Journal of Laws of 2018, item 723, as amended), which, among other things, reduced the threshold for reporting cash transactions by banks and other financial market entities as of 13 July 2018 (implementation of AMLD IV);	Increase in operating expenses
De minimis
Resolution of the Polish Minister of Finance on granting de minimis aid by Bank Gospodarstwa Krajowego in the form of loan repayment guarantees (Journal of Laws of 2018, item 707) and Resolution of the Polish Minister of Finance on granting de minimis aid by Bank Gospodarstwa Krajowego in the form of loan repayment guarantees under the Smart Growth Operational Programme dated 12 June 2018 (Journal of Laws of 2018, item 1166), which extended the period of guarantee of loan repayment until 30 June 2021.	Positive influence on the banks’ lending activities
Mandatory reserve
Resolution 6/2017 of the Monetary Policy Council (NBP Official Journal No. 2017, item 22) reducing the mandatory reserve on acquired funds from 3.5% to 0% for at least 2 years as of 30 April 2018; Resolution 7/2017 of the Monetary Policy Council (NBP Official Journal of 2017, item 24) reducing interest on the mandatory reserve funds from 1.35 to 0.50% as of 1 January 2018.	Negative impact on net interest income
Changes in Taxes
Act of 27 October 2017 amending the Personal Income Tax Act, the Corporate Income Tax Act and the Act on flat-rate income tax on some revenues generated by individuals (Journal of Laws of 2017, item 2175), which introduces solutions which have an impact on increasing the CIT burdens, including: categorization of sources of income (from capital gains and from other sources of income), general restriction on the costs of debt financing in place of the so-called thin capitalization provisions, restrictions on classifying expenses on intangible services and intangible assets acquired from related parties as tax-deductible costs, limitation of the scope of exemptions in respect of shares in profits of legal entities, changes adapting tax regulations to IFRS 9 coming into force, and implementation of the so-called minimum income tax – a tax on buildings; Act of 24 November 2017 on amending certain Acts in order to counteract using the financial sector for tax extortions (Journal of Laws of 2017, item of Laws of 2017, item 2491), which introduces – among other things – new obligations within the scope of providing information about accounts of entities engaging in business activities through the IT system of the clearance chamber (STIR) to the Chief of the National Revenue Administration, and blocking the accounts at the request of the Chief of the National Revenue Administration; Act of 15 December 2017 on amending the Act on VAT and certain other acts (Journal of Laws of 2018, item 62), which imposes a duty on banks to open and maintain VAT accounts linked to the clearing accounts already maintained by banks as of 1 July 2018, and a duty to service payments of invoices made and received by Customers via the bank, using the split payment mechanism.	Differentiated impact on financial results

In 2018 new legal solutions implemented in the Ukraine (where, among other things, the subsidiary KREDOBANK SA operates) had an impact on the operations and results of the PKO Bank Polski SA Group, including:

LEGAL AND REGULATORY SOLUTION	IMPACT
Change in base interest rates
Resolutions of the Ukrainian Central Bank (NBU) No. 43/2018, 133/2018, 443D and 593D, which related to increases in the discount rate: as of 26 January 2018 of 1.5 p.p. to 16%, as of 2 March 2018 to 17%, as of 13 July 2018 to 17.5%, as of 7 September 2018 to 18%.	Impact on banks’ net interest income and their returns
New Accounting Standard IFRS 9
NBU Decision No. 1/2018 and 33/2018 relating to IFRS 9 Financial Instruments, specifying – among other things – the banks’ gradual transition to IFRS 9, the manner of calculating and recording impairment allowances and classification of financial instruments, as well as introducing new hedge accounting requirements.	Impact on the financial result, equity
Credit value
Decision of the NBU No. 15/2018 changing the principles for determining the overall value of consumer credit and of the real interest rate as of 2 March 2018.	Impact on interest and non-interest income
Currency Management
Decisions of the NBU No. 19/2018, 45/2018, 65/2018 which, among other things, mitigate restrictions relating to foreign currency management, change licencing principles in respect of foreign currency transaction and introduce the duty to resell inflows in foreign currencies.	Impact on the banks’ business operations, managing their currency position and risk levels
Risk
Decision 3/2018, which introduced changes to the scope of identifying credit risk; Decision of the NBU No. 64/2018, which implemented a risk management system for banks as of 16 June 2018; Decision of the NBU No. 98/2018, which relates to the banks’ liability for the ineffective risk management system in banks; Decision of the NBU No. 123/2018 which changes the principles for determining the amount of credit risk.	Impact on liquidity risk, market risk and operational risk management
Liquidity
Decisions 13/2018, 87/2018 and 114/78 of the NBU relating to the LCR ratio (minimum level: 80%, and in a foreign currency: 50% to be maintained as of 31 December 2018).	Impact on liquidity management
Stability of banks /Equity
Decisions No. 104/2018, 115/2018 and 133/2018 of the NBU, which – among other things – changed the principles for filing with the NBU and its approving capitalization plans and bank restructuring plans; Decision No. 148/2018 of the NBU, which relates to a new instrument for banks’ capitalization and the terms and conditions of conversion/redemption.	Impact on banks’ equity

External Business Conditions

Ukrainian market

Our environment

Our Customers

Regulatory and Legal Environment

search results: