45. Transactions with the State Treasury and related parties

The State Treasury has control over the Bank 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 41 ‘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 Groups’s statement of financial position. In accordance with the Act of 30 November 1995 in relation to State support in the repayment of certain housing loans, reimbursement of guarantee premium paid and amendments of several acts (Journal of Laws, 2013, No. 763) PKO Bank Polski SA receives payments from the State budget in respect of redemption interest receivable on housing loans.

  2015 2014
Income due to temporary redemption by the State budget of interest on housing loans from the ‘old’ portfolio recognised for this period 85 041 82 007
Income due to temporary redemption by the State budget of interest on housing loans from the ‘old’ portfolio received in cash 34 789 44 714
Difference between income recognised for this period and income received in cash – the position ‘Loans and advances to customers’ 50 252 37 293

The Act on the coverage of repayment of certain housing loans by State Treasury (Journal of Laws, 2000, No. 122 item 1310 with subsequent amendments) guarantees was passed on 29 November 2000 and came into force on 1 January 2001. In execution of the provisions of the Act, on3 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 of repayment of 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. The coverage of the so-called ‘old’ portfolio housing loan receivables by the guarantees of the State Treasury results in the neutralisation of the default risk on these loans.

The State Treasury guarantees are realised when a borrower fails to repay the loan on the dates specified in the loan agreement. The responsibility of the State Treasury is of an auxiliary nature and is effective if the recovery of the unpaid part of principal and interest which the Bank is obliged to commence, before the Bank lays claims to the State Treasury, becomes ineffective. The above-mentioned law covers 90% of unpaid loans taken out by housing cooperatives. As a consequence of the realisation of the State Treasury’s responsibilities as guarantor, the State Treasury itself enters into the rights of the satisfied creditor (the Bank) and thus becomes a creditor towards the borrower, in line with the concept of guarantee. PKO Bank Polski SA receives commission for settlements relating to redemption of interest by the State budget on housing loans.

  2015 2014
Fee and commission income 3 081 3 226

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 budget.

 

  2015 2014
Fee and commission income 12 265 9 613

The Brokerage House of PKO Bank Polski SA performs 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.

  2015 2014
Fee and commission income 23 218 23 037

Significant transactions of PKO Bank Polski SA Group with the State Treasury’s related entities

The transactions were concluded at arm’s length terms. The margins on credit transactions are in the range of 0.28% to 3.75%.

Entity 31.12.2015 2015
  Total receivables Total liabilities Off-balance sheet liabilities granted– guarantee and financial Interest and similarincome Fee and commission income Interest expense and similar charges
Entity 1 - - 2 450 000 - - -
Entity 2 8 1 046 516 1 500 000 11 293 (23 279)
Entity 3 - 931 422 - - 3 (2 203)
Entity 4 - 606 343 350 000 1 37 (10 416)
Entity 5 - 501 001 715 852 - 4 (6 722)
Entity 6 472 602 380 543 386 854 8 245 1 611 (5 651)
Entity 7 - 264 443 - - 971 (1 879)
Entity 8 250 057 240 524 2 407 840 1 899 2 857 (1 712)
Entity 9 - 219 506 - 10 185 (2 881)
Entity 10 - 214 989 - - 16 (4 993)
Entity 11 113 467 196 961 574 780 3 715 6 (964)
Entity 12 220 156 451 - 261 1 158 (1 635)
Entity 13 - 118 217 - - 8 (655)
Entity 14 163 275 99 099 50 000 5 206 87 (873)
Entity 15 - 73 188 354 500 - 870 (1 025)
Other entities 903 202 587 016 2 355 363 28 340 7 504 (34 585)
Total 1 902 831 5 636 219 11 145 189 47 688 15 610 (99 473)

Entity 31.12.2014 2014
  Total receivables Total liabilities Off-balance sheet liabilities granted– guarantee and financial Interest and similarincome Fee and commission income Interest expense and similar charges
Entity 1 - - 2 080 000 - - -
Entity 2 184 925 1 001 114 647 423 3 095 903 (7 633)
Entity 4 - 1 099 1 368 860 - 35 (264)
Entity 5 - 9 190 1 201 440 48 1 060 (396)
Entity 6 - 1 177 873 - - 2 (13 860)
Entity 8 285 955 283 174 422 752 4 335 522 (4 302)
Entity 11 - 160 250 701 786 4 302 (4 790)
Entity 12 - 98 728 500 000 - 1 (23 708)
Entity 17 - 582 771 - 26 1 519 (2 555)
Entity 23 386 306 16 294 151 587 13 274 204 (46)
Entity 25 113 481 18 235 396 474 7 045 5 (509)
Entity 26 - 109 604 400 000 - 12 (245)
Entity 38 113 422 80 540 61 819 5 120 1 107 (1 216)
Entity 53 67 704 14 487 157 659 3 880 217 (110)
Entity 61 62 901 1 984 150 000 2 872 44 (90)
Other entities 259 499 637 143 165 524 16 228 3 771 (12 300)
Total 1 474 193 4 192 486 8 405 324 55 927 9 704 (72 024)

As at 31 December 2015 and as at 31 December 2014 respectively, no significant impairment allowances were recognised for the above-mentioned receivables.