POLAND Law and Practice Contributed by: Marcin Olechowski, Wojciech Iwański, Tytus Brzezicki and Piotr Orłowski, Sołtysiński Kawecki & Szlęzak
Obligatory reserve Banks are also required to maintain reserves representing a portion of, inter alia, cash depos - ited in bank accounts held by these banks. The obligatory reserve of banks is the amount – expressed in Polish zlotys – of cash in zlotys and foreign currencies deposited in bank accounts, funds obtained from the issuance of debt secu - rities, and other funds accepted by the bank subject to repayment. Some funds are excluded from the mandatory reserve calculation. 8. Insolvency, Recovery and Resolution 8.1 Legal and Regulatory Framework Insolvency Banks may be subject to regular insolvency proceedings before the competent courts, with certain differences. Only the PFSA may file for a bank’s insolvency. However, if the BGF issues a resolution decision, the PFSA cannot file for insolvency. The BRRD, which largely follows the Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions, has been implemented in Poland. Poland, as a non-eurozone country, does not participate in the EU Single Resolution Mecha - nism. The competence to resolve a failing bank lies with the domestic BGF. The resolution may be triggered, in particular, to maintain financial stability or protect depositors. These goals are achieved through: • preparing resolution plans; • the redemption or conversion of equity instru - ments; or
• resolving the bank. Course of Resolution Three criteria need to be met to start a resolu - tion: • a bank is at risk of failing; • there are no reasonable indications that the actions of the bank, institutional protection system, or the supervisor will remove the bankruptcy threat in a timely manner; and • the resolution is necessary for the public interest. After starting the resolution, the BGF acquires the right to adopt resolutions and decisions on matters reserved by the articles of association of a bank’s bodies, and becomes an entity enti - tled to solely represent the bank under resolution as the management board and the bank’s other bodies are dissolved. The BGF may appoint a management board or an administrator for the bank under resolution.
Resolution tools include: • the sale of the business; • bridge institutions; • asset separation; and • bail-in.
The resolution proceedings may be supported by the actions of the institutional protection scheme – recently created in Poland – to guar - antee the liquidity and solvency of the scheme’s participants. The institutional protection scheme is administered by a special purpose entity cre - ated by commercial banks. Insolvency Deposit Preference The BGF’s depositor protection scheme protects the clients’ deposits in the case of the ordinary
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