POLAND Law and Practice Contributed by: Marcin Olechowski, Wojciech Iwański, Tytus Brzezicki and Piotr Orłowski, Sołtysiński Kawecki & Szlęzak
in relation to which the guarantee condition has been fulfilled, in the amount of the sum of guar - anteed funds. 7. Prudential Regime 7.1 Capital, Liquidity and Related Risk Control Requirements Initial Capital and Basel III Standards The BL prescribes the minimum of the Polish zloty equivalent of EUR5 million as a bank’s ini - tial capital. However, the PFSA requires the initial capital to correspond to the intended scale and scope of bank activities that a bank wishes to engage in. The broader the scope of the banking licence, the greater the expectations the PFSA may have for initial capital. The EU adopted the CRR/CRD package to imple - ment most of the Basel III standards. These acts are either directly applicable in Poland (CRR) or were implemented in the BL (CRD). Capital Requirements The core capital adequacy requirement impos - es an obligation upon banks to maintain a total capital ratio (own funds – the sum of Tier I capital and Tier II capital) of at least 8% of risk-weighted assets. The Common Equity Tier 1 capital ratio should be at least 4.5%, whereas an overall Tier I capital ratio should not be lower than 6%. The leverage ratio means the relative – to the bank’s own funds – size of the bank’s assets, off-balance sheets liabilities, and contingent liabilities. At no time should it be lower than 3%. The BL further stipulates that banks are obli - gated to maintain higher capital adequacy rates if those the CRR prescribed are not sufficient to cover all identified, significant risks present in a
bank’s operations and changes in the economic environment, taking into account the expected level of risk. The PFSA is authorised to impose additional requirements for own funds and a bank’s liquid - ity. Liquidity Requirements Under the CRR, banks are required to have enough liquid assets to cover a minimum of 100% of net outflows for 30 days under stress conditions. Banks that do not comply with the requirement or expect not to comply are obli - gated to notify the PFSA of this fact and present a recovery plan aiming at restoring the appropri - ate liquidity level. Buffers and Obligatory Reserve Safety buffer Banks should also maintain an additional safe - ty buffer equal to the amount of the Common Equity Tier 1 capital of 2.5% of the total risk exposure. Countercyclical buffer The countercyclical buffer should amount to the Common Equity Tier I capital at the level of the total risk exposure calculated in accordance with the CRR, multiplied by the weighted average of the countercyclical buffer ratios. Other buffers Polish regulations also distinguish a buffer appli - cable to global systemically important institu - tions. Additional systemic risk buffers may also be introduced when appropriate. The buffers do not account for the bank’s fulfil - ment of the own-funds requirement under the CRR or of any other additional capital adequacy requirements under the applicable legislation.
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