Regulatory and legal environment

The following new legal and regulatory solutions, which became binding in 2021, had a significant impact on the financial position and operations of the PKO Bank Polski S.A. Group, including in particular:
Annual Report
Solution Impact
Risk management
Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012. Starting to apply new regulatory requirements in respect of the net stable financing ratio (NSFR) and leverage ratio (LR), implementing the new method of calculating the capital requirements for counterparty risk (SA-CCR).
Update of the Polish Financial Supervision Authority’s Recommendation S concerning good practices for the management of mortgage-secured loan exposures. The requirement to introduce in the bank’s offer mortgage loans with a variable interest rate and fixed interest rate (for a five-year period for loans with a maturity of more than 5 years, or over the entire period for loans maturing within 5 years), development of a method of designating overpayments of loans which have repayment schedules, taking into account changes in the calculation of liquidity risk measures.
Guidelines of the European Banking Authority on loan origination and monitoring (EBA/GL/2020/06) which have superseded the Guidelines on creditworthiness assessment (EBA/GL/2015/11). Improvement of banking practices in order to ensure solid and prudent credit risk management standards and to ensure the granting of loans in line with consumer protection and the fair treatment of consumers.
Commission Implementing Regulation (EU) 2021/637 of 15 March 2021 laying down implementing technical standards with regard to public disclosures by institutions of the information referred to in Titles II and III of Part Eight of Regulation (EU) No 575/2013 of the European Parliament and of the Council and repealing Commission Implementing Regulation (EU) No 1423/2013, Commission Delegated Regulation (EU) 2015/1555, Commission Implementing Regulation (EU) 2016/200 and Commission Delegated Regulation (EU) 2017/2295. Ensuring uniform reporting process for banks regarding capital adequacy information. Introducing a set of uniform forms, templates and tables, and ensuring the high quality of the information disclosed.
Commission Implementing Regulation (EU) 2021/763 laying down implementing technical standards with regard to the supervisory reporting and public disclosure of the minimum requirement for own funds and eligible liabilities. Introducing the obligation to regularly submit new reporting forms regarding MREL.
The Act of 8 July 2021 on amendments to the Act on the Bank Guarantee Fund, deposit guarantee scheme and compulsory resolution, and certain other acts Changes resulting from the BRR Directive, including the rules for calculating and maintaining MREL requirements, were implemented in the Polish legal system.
Letter from the Bank Guarantee Fund (BGF) of 2 December 2021 (Bank Guarantee Fund) on updating the level of MREL and designating mid-term MREL targets for the Bank. Change in the regulatory requirements regarding MREL
PFSA decisions on the amount of additional capital requirement to secure the risk related to currency mortgage loans for households. Reducing the minimum supervision requirements with regard to the value of indices.
Interest rates
In 2021, the Monetary Policy Council raised interest rates three times, in total by 165 b.p. (all increases took place in the fourth quarter of 2021), as a result of which the reference rate went up from 0.10% to 1.75%. The drop in the valuation of debt instruments, drop in the valuation of IRS instruments, hedging volatility of interest income.
At the same time, the Monetary Policy Council changed the mandatory reserve rate from 0.5% to 2%. Increase in interest income in 2022.
Amended Act on countervailing money laundering and terrorist financing which implements the provisions of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the so-called fifth AML Directive which modifies the EU legislation and increases the transparency of financial flows). Introducing new obligations in respect of the application of financial safety measures and implementing further actions in business relations with Customers connected with high-risk third countries.
Regulations applicable as of 1 January 2021, amending income tax Acts introduced, among other things, in respect of taxpayers with annual revenue exceeding EUR 50 million and Tax Groups with an obligation to prepare and publish information on their pursued tax strategy on their websites. According to the communication of the Ministry of Finance, the first information for 2020 should be prepared by the end of 2021.

Still the solutions implemented in 2020 had an impact, in relation to countervailing the effects of the COVID-19 pandemic, mentioned in the PKO Bank Polski S.A. Group Directors’ Report for 2020.

The activities of KREDOBANK S.A. were affected by regulatory and legal changes in Ukraine, including in particular relating to changes in the discount rate, protection of the rights of financial services’ consumers, improving the corporate governance organization in Ukrainian banks, and provisions aimed at countervailing or limiting the consequences of the COVID-19 pandemic.

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