Polish Covered Bonds - Poland

1	What type of assets may be included in the cover pool?
	Primary assets Substitution assets Public sector assets Mortgage assets Other 1* Other 2* Other 3*   Exposures to public sector entities x Residential mortgage loans x Commercial mortgage loans x Derivatives x x Securities purchased by the mortgage bank * x Derivatives - only for hedging purposes *Securities purchased by the mortgage bank which are issued by: (a) the State Treasury, b) local government units, c) Bank Gospodarstwa Krajowego, secured in full by a guarantee or surety of the State Treasury. Exposures to National Bank of Poland
2	What is the geographical scope of assets?
	Primary assets Substitution assets Public sector assets Mortgage assets Other 1* Other 2* Other 3*   Domestic x x EU x OECD x *can be one cover pool of ship loans, one cover pool of mortgage & public sector assets, one cover pool of export finance loans, etc.
3	Is there a maximum level for substitute assets in the statutory national framework?	Yes, please specifiy Minimum 85% limit for primary assets
4	Are there any reporting requirements for covered bond issuers to investors?	Yes, by law and in line with art. 14 of EU Covered Bond Directive and by contractual obligations
5	What is the frequency of reporting to investors?	Quarterly

1	What is the basis for property valuation	Mortgage lending value
2	Is a regular update of the property value required?	No MBV is a longterm one, but the value of real estate in accordance with CRR
3	What are the LTV limits (single asset based)? Please specify in %/n.a.	Residential Commercial 80% for residential 60% for commercial
4	Are loans in excess of LTV limits eligible for inclusion in the cover pool?	Yes (soft limit) Such loan is a basis for covered bond issue up to 80%/60% of mortgage lending value.

IV.1 Derivative contracts in the cover pool

1	Are derivative contracts eligible for the inclusion in the cover pool?	Yes, exclusively for hedging purposes (by law)
2	Are there requirements for derivative contracts (e.g. eligibility criteria for hedging counterparties)?	Yes, specified in law in accordance with CB directive
3	Will derivative contracts remain in case of insolvency of the issuer?	Yes
4	If derivatives are permitted in the cover pool, what is their ranking?	Pari passu to covered bond holders

IV.2 Exposure to market risk

1	What is the primary method for the mitigation of market risk?	Natural' matching (i.e. match funding, matching without the use of off-balance sheet instruments) and stress testing Use of derivative hedging instruments natural matching but on the portfolio level
2	Are there mitigating provisions for interest rate risk?	Yes, by legislation/regulation
3	Are there mitigating provisions for foreign exchange risk?	Other
4	Are there mitigating provisions for maturity mismatch risk?	Other Provisions on liquidity test can mitigate the maturity mismatch risk.
5	What type of coverage test is applied?	Nominal cover
6	Are there stress scenarios applied?	Yes, by law Stress scenario for foreign Exchange risk: +/- 20% change of exchange rate, and for interest risk +/- 400 bp change.

IV.3 Liquidity risk

1	Is exposure to liquidity risk mitigated?	Yes, by law Liquidity test for cover pool applied and liquidity buffer in cover pool.
2	What liquidity risk mitigation requirements are in place (principal)?	180 days liquidity provisions Maturity extension provisions Stress testing requirements 180 days liquidity provision - buffer calculated on the basis of final maturity (extension of principal), only interest taken into calculation of liquidity buffer.
3	What liquidity risk mitigation requirements are in place (interest)?	180 days liquidity provisions Maturity extension provisions Stress testing requirements Other, please specify Other: Legal provision that income from interest paid by borrowers should be sufficient to cover interest payments from CBs.
4	What is the consequence of not fixing a breach of liquidity risk mitigants?	Other, please specify the failure of liquidity test is reported to FSA which can decide on the appropriate measures.
5	If 180 days liquidity provisions are in place, what types of liquid assets are eligible	LCR Level 1 LCR Level 2a LCR Level 2b specified assets are taken for liquidity buffer calculation.
6	If 180 days liquidity provisions are in place, the calculation of principal is based on:	The (extended) legal final maturity date

IV.4. Maturity extension

1	Is maturity extension allowed by national law?	Yes, required It is an automatic consequence of bankruptcy.
2	Is it possible to issue…	Soft bullet Conditional pass-through Soft bullet and CPT are possible only when bankruptcy is approved by the court.
3	Which trigger plays a role for maturity extension according to law - independent or alone or in combination?	Issuer bankruptcy/resolution
4	Does any competent authority need to give its okay (or non-opposition)?	Yes in that sense that bankruptcy is declared by court.

IV.5 Overcollateralisation

1

Is mandatory overcollateralisation required in the law ?

V.1 Cover pool monitor (CPM)

1	Is there a cover pool monitor in addition to national competent authorities in the statutory law?	Yes, by law and in line with Article 13 of EU Covered Bond Directive
2	Is the CPM separate from the issuing credit institution?	Yes, required by national statutory law
3	Is the appointment, dismissal, eligibility criteria and the role of the CPM regulated by the national statutory law?	Yes

V.2 Banking supervision

1	Which are the national competent authorities designated to carry out covered bonds public supervision in the law?	Polish Financial Supervision Authority - Website - National list
2	Is a special permission required for a covered bond programme according to national law?	Yes, licence for institution
3	Is there a covered bond issuance limit in law or regulation? If yes, please specify	Yes The total amount of the nominal value of the outstanding covered bonds of a mortgage bank may not exceed 40 times its own funds.
4	Does the national statutory law provide for the appointment of a dedicated cover pool administrator in case of insolvency/resolution (transfer included acc. to BRRD [Bank Recovery and Resolution Directive])?	Yes
5	Which is the typical frequency in the national statutory law of reporting from the covered bond issuers to the designated competent authorities?	Other Annual, but in practice FSA requires quarterly report.

1	Does the national statutory law meet the requirements laid down in the EU Covered Bond Directive?	Yes
2	Does the statutory law meet the requirements of Article 129 of CRR [Capital Requirement Regulation]? In this case, please specify the collateral types meeting the Art. 129 CRR.	Yes
3	Does the statutory law allow covered bonds out of the scope of Art 129 of CRR? In this case, please specify the collateral	No
4	Are listed covered bonds eligible in repo transactions with the national central bank?	Yes National Bank of Poland publishes the list of repo eligible CBs.

Hypostat

• Poland.pdf (English language)

Fact Book

• 3.31 Poland.pdf (English language)

Any further comments/information?