Transactions with the State Treasury
The State Treasury has control over the Group as it holds a 29.43% interest in the Bank’s share capital. The Bank’s shareholding structure is described in detail in the note ‘Equity and shareholding structure of the Bank’ to these financial statements.
Receivables, securities and liabilities arising from transactions conducted with the State Treasury, budgetary units and entities in which the State Treasury is the shareholder are disclosed in the Group’s consolidated statement of financial position.
Pursuant to the Act of 30 November 1995 on state support in the repayment of certain housing loans, reimbursement of guarantee bonuses paid, and amendments to certain Acts, PKO Bank Polski SA receives payments from the State budget as the repurchase of interest receivable on housing loans.
|INCOME FROM TEMPORARY REDEMPTION BY THE STATE TREASURY |
OF INTEREST ON HOUSING LOANS IN THE "OLD" PORTFOLIO
|Income recognized on the accruals basis||60||65|
|Income recognized on a cash basis||30||25|
|Difference – Loans and advances to customers||30||40|
The Act on covering the repayment of certain housing loans with State Treasury guarantees was passed on 29 November 2000 and came into force on 1 January 2001. In the performance of the provisions of the Act, on 3 August 2001 PKO Bank Polski SA signed an agreement with the Minister of Finance acting on behalf of the State Treasury under which the Bank was granted a pledge for repayment of the debt arising from housing loans in the so-called ‘old’ portfolio.
On 29 December 2011, the validity period of the agreement (originally until 31 December 2011) was extended until 31 December 2017. As a result of covering the so-called ‘old’ portfolio housing loan receivables with guarantees of the State Treasury, the default risk on these loans was mitigated.
As of 1 January 2018, pursuant to the Act of 30 November 1995 on state support in the repayment of certain housing loans, reimbursement of guarantee bonuses paid, and amendments to certain Acts, loan recipients will obtain the right to extinguish their remaining debt, which will be charged to the State budget, as a result of which the ‘old portfolio’ housing loans will be fully settled.
The Bank conducts settlements in respect of the repurchase of interest on housing loans by the State budget and the respective commission in 2017 and 2016 amounted to PLN 3 million.
As of 1 January 1996, the Bank became the general distributor of court fee stamps. The Bank receives commissions in this respect from the State Treasury –PLN 5 million in 2017 and PLN 12 million in 2016).
Dom Maklerski PKO Banku Polskiego SA plays the role of an agent for the issue of retail treasury bonds under the agreement signed with the Ministry of Finance on 11 February 2003. Under this agreement, the Brokerage House of PKO Bank Polski SA receives a fee for providing the services of an agent for the issue of bonds – PLN 56 million in 2017 and PLN 37 million in 2016.
Significant transactions with the State Treasury’s related entities
The Group’s exposure and the value of the Group’s liabilities to 10 entities related to the State Treasury with the highest total exposure are presented below. The transactions were concluded on arm’s length terms.
|Balance sheet exposure, including exposure|
to loans and debt instruments
|Off-balance sheet exposure||Liabilities in respect of deposits|
|counterparty 1||-||-||2 450||2 450||-||-|
|counterparty 2||2 936||-||-||-||-||-|
|counterparty 3||1 004||1 327||1 825||1 529||55||3|
|counterparty 4||2 024||1 503||308||869||186||126|
|counterparty 5||29||46||1 832||1 521||4 093||350|
|counterparty 6||284||386||1 463||385||290||271|
|counterparty 7||333||332||1 269||1 206||-||533|
|counterparty 8||1 017||144||548||360||-||-|
|counterparty 9||1 270||1 289||51||193||-||-|
|counterparty 10||286||37||815||1 069||-||1 085|
In 2017, interest and commission income on the transactions with the 10 counterparties referred to above amounted to PLN 68 million (PLN 3 million in 2016), and the respective interest expense amounted to PLN 9 million (PLN 14 million in 2016). As at 31 December 2017 and as at 31 December 2016, respectively, no impairment allowances were recognized on an individual basis for the above-mentioned receivables.
In the Bank’s opinion, all transactions with entities related to the State Treasury are at arm’s length.
Related-party transactions – capital links
Transactions of the parent company with associates and joint ventures accounted for under the equity method. All transactions with subsidiaries, joint ventures and associates presented below were arm’s length transactions. Repayment terms are within a range of from one month to seventeen years.
|AS AT 31 DECEMBER 2017/ENTITY||Receivables||of which loans||Liabilities||Off-balance sheet liabilities granted|
|Centrum Elektronicznych Usług Płatniczych eService Sp. z o.o.||49||6||37||25|
|„Centrum Obsługi Biznesu" Sp. z o.o.||19||19||9||-|
|Bank Pocztowy SA||-||-||-||1|
|„Poznański Fundusz Poręczeń Kredytowych" Sp. z o.o.||-||-||16||-|
|Total joint ventures and associates||68||25||62||26|
|FOR THE YEAR ENDED 31 DECEMBER 2017 / ENTITY||Total income||of which interest and|
|Total expense||of which interest and|
|Centrum Elektronicznych Usług Płatniczych eService Sp. z o.o.||347||332||124||124|
|Total joint ventures and associates||347||332||124||124|
|AS AT 31 DECEMBER 2016 / ENTITY||Receivables||of which loans||Liabilities||Off-balance sheet liabilities granted|
|Centrum Elektronicznych Usług Płatniczych eService Sp. z o.o.||10||10||18||21|
|„Centrum Obsługi Biznesu" Sp. z o.o.||28||28||10||-|
|Bank Pocztowy SA||-||-||1||1|
|„Poznański Fundusz Poręczeń Kredytowych" Sp. z o.o.||-||-||8||-|
|Walcownia Rur Ferrum Sp. z o.o.||-||-||2||-|
|Total joint ventures and associates||38||38||39||22|
|FOR THE YEAR ENDED 31 DECEMBER 2016 / ENTITY||Total income||of which interest and commission income||Total expense||of which interest and commission income|
|Centrum Elektronicznych Usług Płatniczych eService Sp. z o.o.||270||259||115||115|
|„Centrum Obsługi Biznesu" Sp z o.o.||1||1||-||-|
|Total joint ventures and associates||271||260||115||115|
Related-party transactions – personal links
As at 31 December 2017 and 31 December 2016, one entity was related to the Group through the key management personnel of PKO Bank Polski SA or close family members of the key management personnel. In 2017 and in 2016, no transactions were conducted between the Group and that entity.