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Banking Regulations in Poland

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Poland has a robust regulatory framework for its banking industry, which ensures the stability and security of financial institutions. This article provides an overview of the capital requirements calculation, liquidity requirements, risk management policies, supervision, sanctions, and enforcement mechanisms in place for banks operating in Poland.

Capital Requirements Calculation

The capital requirements for banks in Poland are calculated according to the CRR/CRD package, which implements the Basel III standards. The capital requirement is calculated as a percentage of risk-weighted assets (RWAs), which includes:

Risk-Weighted Assets (RWA)

Credit Risk

  • 72% of outstanding loans and advances

Market Risk

  • 8% of market-sensitive instruments

Operational Risk

  • 1% of net revenue

Credit Valuation Adjustment (CVA)

  • 4.5% of CVA exposure

The total capital requirement is the sum of the credit, market, operational, and CVA requirements.

Liquidity Requirements

Banks in Poland are required to maintain a minimum liquidity coverage ratio (LCR) of 100%, which means that they must hold enough high-quality liquid assets to cover their net cash outflows over a 30-day stress period. The LCR is calculated as the ratio of:

Available Stable Funding

  • To total net cash outflows

Risk Management

Banks in Poland are required to implement effective risk management policies and procedures, including:

Credit Risk

  • Banks must have a credit policy that outlines their lending criteria, credit assessment process, and risk appetite.

Market Risk

  • Banks must have a market risk policy that outlines their risk management framework, valuation methods, and limits for trading activities.

Operational Risk

  • Banks must have an operational risk policy that outlines their risk management framework, control measures, and incident reporting procedures.

Supervision

The Polish Financial Supervision Authority (PFSA) is responsible for supervising banks in Poland to ensure they comply with banking laws and regulations. The PFSA has the power to:

On-Site Inspections and Audits

  • Conduct on-site inspections and audits of banks.

Information Gathering

  • Collect information and documents from banks.

Administrative Penalties

  • Impose administrative penalties, including fines and warning notices.

Sanctions and Enforcement

Banks that fail to comply with banking laws and regulations in Poland may face sanctions, including:

Fines

  • Up to PLN 1 million (approximately EUR 230,000)

Warning Notices

  • Issued by the PFSA to alert banks of potential non-compliance issues.

Suspension or Revocation of Licenses

  • In severe cases, the PFSA may suspend or revoke a bank’s license to operate.