Financial Crime World

Here is the converted article text in markdown format:

Poland’s Banking Sector: Regulation, Supervision, and Stability

The Polish Financial Supervision Authority (PFSA) is responsible for regulating and supervising the country’s banking sector. According to the PFSA, a significant bank is defined as one whose shares are traded on a regulated market, has a minimum 2% share of banking sector assets or deposits, or whose own funds account for at least 2% of the banking sector’s total own funds.

Foreign Banks and Credit Institutions

Foreign credit institutions can operate in Poland through branches or cross-border services, subject to authorization from their home country’s competent supervisory authority. Foreign banks without a presence in an EU member state may only operate as branches in Poland with PFSA authorization. Representative offices of foreign banks and credit institutions are also permitted, but they are limited to advertising and promoting the parent institution.

Banking Regulations

The Banking Law governs the operations of Polish banks, including:

  • The exchange of payment orders
  • Mutual receivables under payment orders
  • Establishment of a bank clearing house for efficient payments between participating banks

Para-Banking Sector

Poland’s para-banking sector is dominated by cooperative savings and credit unions, which are authorized by the PFSA to:

  • Collect funds from members
  • Grant loans and credits
  • Conduct financial settlements
  • Distribute insurance

However, due to irregularities and bankruptcies in recent years, these entities have become increasingly rare.

Mortgage Banks

Mortgage banks, established under the Act on Mortgage Bonds and Mortgage Banks, provide mortgages by issuing mortgage-backed bonds, reducing loan financing costs. These banks can also:

  • Grant secured or unsecured loans
  • Purchase other banks’ debts

Deposit Guarantee Scheme

The Polish Deposit Guarantee Scheme (PGG) guarantees deposits up to PLN 100,000 per depositor, per bank. The scheme is managed by the Bank Guarantee Fund (BGF), which also oversees the resolution of financial institutions at risk of bankruptcy.

Supervision and Regulation

The PFSA exercises consolidated supervision over banks operating in holding companies, requiring them to provide:

  • Consolidated financial statements
  • Conducting control activities in entities operating within these holdings
  • Recommending reviews of the financial situation of subsidiaries or entities with close links to a domestic bank

The authority also issues recommendations on best practices for prudent and stable bank management, as well as imposing administrative penalties for non-compliance with regulatory requirements.

Competition and Consumer Protection

The Polish Competition and Consumer Protection Office (UOKiK) regulates the banking sector, including:

  • Reviewing concentrations
  • Inspecting abusive clauses in consumer relations

The National Bank of Poland (NBP), responsible for monetary policy, also supervises the payment system infrastructure to ensure its security and efficiency.

Consolidated Supervision

The PFSA is responsible for consolidated supervision over banks operating within holding companies. This includes:

  • Requiring them to provide consolidated financial statements
  • Conducting control activities in entities operating within these holdings
  • Recommending reviews of the financial situation of subsidiaries or entities with close links to a domestic bank

The authority has entered into agreements with foreign authorities to cooperate on a consolidated basis.

Recent Developments

In 2020, the European Union’s CRR II/CRD V package came into effect, introducing new provisions for financial holding companies and consolidating supervision. Poland is expected to implement these provisions later in 2021.