40. Transactions with the State Treasury and related parties

The State Treasury has control over the parent entity of the Group as it holds a 31.39% interest in the Bank’s share capital. The Bank’s shareholding structure is described in detail in Note 1 ‘General Information’ to these financial statements.

Receivables, securities and liabilities arising from transactions conducted with the State Treasury and other state budgetary agencies are disclosed in the Group’s statement of financial position.

In accordance with the 30 November 1995 Act in relation to State support in the repayment of certain mortgage loans, reimbursement of guarantee premium paid and amendments of several acts (Journal of Laws, 2013, item 763 with subsequent amendments) PKO Bank Polski SA receives payments from the State budget in respect of interest receivable on housing loans.

	2013	2012
Income due to temporary redemption by the State budget of interest on housing loans from the ‘old’ portfolio recognised for this period	109,478	154,417
Income due to temporary redemption by the State budget of interest on housing loans from the ‘old’ portfolio received in cash	64,701	108,137
Difference between income recognised for this period and income received in cash – ‘Loans and advances to customers’	44,777	46,280

transactions-with-the-state-treasury.xls

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, 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 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 Treasury on housing loans.

	2013	2012
Fee and commission income	4,103	4,536

transactions-with-the-state-treasury-2.xls

As of 1 January 1996 the Bank became the general distributor of value marks. The Bank receives commissions in this respect from the State Treasury.

	2013	2012
Fee and commission income	20,927	25,624

transactions-with-the-state-treasury-3.xls

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.

	2013	2012
Fee and commission income	29,022	39,295

transactions-with-the-state-treasury-4.xls

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

The transactions were concluded on arm’s length.

Entity	31.12.2013			2013
Entity	Total receivables	Total liabilities	Off-balance sheet liabilities granted – guarantee and financial	Interest income	Fee andcommissionincome		Interest expenses
Entity 1	-	-	2,080,000	-	-		-
Entity 2	-	1,749	1,198,324	-	33		(623)
Entity 3	211,048	242,088	333,258	3,139	507		(1,242)
Entity 4	223,340	126,268	176,660	10,543	429		(527)
Entity 5	446,352	65	71,214	12,387	1,161		(573)
Entity 6	-	-	600,000	-	-		-
Entity 7	-	19,299	500,000	-	3		(10,651)
Entity 8	-	14,093	500,000	1	2		(247)
Entity 9	-	574	500,000	5,327	270		(5,681)
Entity 10	16,683	2,178	474,003	45	3		(171)
Entity 11	10,130	84,104	359,382	2,390	15		(1,581)
Entity 12	241,279	17,556	175,722	9,187	131		(1,055)
Entity 13	-	36,096	401,786	-	329		(408)
Entity 14	145,798	46,904	117,590	4,891	235		(126)
Entity 15	109,174	50,249	143,331	7,570	1,510		(1,445)
Other entities	346,488	536,068	511,244	17,099	4,549		(14,907)
Total	1,750,292	1,177,291	8,142,514	72,579		9,177	(39,237)

transactions-with-the-state-treasury-5.xls

Entity	31.12.2012		2012
	Total receivables	Total liabilities	Off-balance sheet liabilities granted – guarantee and financial	Interest income	Fee andcommissionincome	Interest expenses
Entity 1	-	-	2,080,000	-	-	-
Entity 2	-	160	1,953,687	-	93	(938)
Entity 12	-	70,879	1,933,000	-	334	(7,707)
Entity 8	-	412	792,344	343	235	(24,291)
Entity 6	-	33	400,000	-	246	(3,819)
Entity 3	199,718	40,754	359,487	5,382	426	(1,584)
Entity 13	118,919	9,342	266,864	8,244	283	(131)
Entity 10	174,441	47,445	243,054	4,974	15	(7,396)
Entity 11	240,340	27,642	19,000	13,872	69	(2,479)
Entity 9	11	1,887	222,800	631	34	-
Entity 16	-	194,771	-	50	1,248	(4,031)
Entity 5	78,916	32,554	190,500	2,924	95	(2,985)
Entity 14	150,671	79,299	142,499	9,106	2,188	(2,967)
Entity 17	103,321	5,011	16,712	7,007	393	(13)
Entity 15	38,283	8,986	100,000	4,075	404	(334)
Other entities	464,658	436,083	375,437	90,468	10,062	(152,587)
Total	1,569,278	955,258	9,095,384	147,076	16,125	(211,262)

transactions-with-the-state-treasury-6.xls

As at 31 December 2013 and 31 December 2012 respectively, no significant impairment allowances were recognised for above-mentioned receivables.