46. Transactions with the state treasury and related parties
2019
Transactions with the state treasury
The State Treasury holds a 29.43% interest in the Bank’s share capital.
Pursuant to the Act of 30 November 1995 on State support in repayment of certain housing loans, reimbursement of guarantee bonuses paid, and amendments to certain acts, PKO Bank Polski SA receives payments from the State budget as repurchase of interest receivable on housing loans
| INCOME FROM TEMPORARY REDEMPTION BY THE STATE TREASURY OF INTEREST ON HOUSING LOANS IN THE ‘OLD’ PORTFOLIO | 2019 | 2018 |
|---|---|---|
| Income recognized on the accruals basis | 93 | 383 |
| Income recognized on the cash basis | 75 | 361 |
| Difference – “Loans and advances to customers” | 18 | 22 |
As of 1 January 2018, based on the provisions of the Act of 30 November 1995 on state support in the repayment of certain housing loans, and reimbursement of guarantee bonuses paid, the borrowers acquired the right to be forgiven the remaining debt by the State Treasury, which will result in gradual (until 2026) full settlement of the housing loan indebtedness from the so-called “old” portfolio. The Bank conducts settlements related to the partial purchase of interest on housing loans by the State Treasury and in 2019 it received commission of below PLN 1 million, and in 2018 of PLN 1 million in this respect.
As of 1 January 1996 the Bank is the general distributor of revenue stamps, and in this respect it receives commission from the State Budget – in 2019 the Bank received commission of below PLN 1 million in this respect, and in 2018 it received PLN 1 million.
Biuro Maklerskie PKO BP plays 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, Biuro Maklerskie PKO BP receives a fee for providing the services of an agent for the issue of bonds- in 2019 in the amount of PLN 83 million, and in 2018 in the amount of PLN 59 million.
Significant transactions with the state treasury’s related entities
The Group’s exposure and the value of the Group’s liabilities to 10 entities related to the State Treasury with the highest total exposure are presented below. The transactions were concluded at arm’s length terms
| BALANCE SHEET EXPOSURE, INCLUDING EXPOSURE TO LOANS AND DEBT INSTRUMENTS |
OFF-BALANCE SHEET EXPOSURE | LIABILITIES IN RESPECT OF DEPOSITS |
||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 31.12.2018 | 31.12.2019 | 31.12.2018 | 31.12.2019 | 31.12.2018 | |
| counterparty 1 | – | – | 2 453 | 2 450 | – | – |
| counterparty 2 | 3 443 | 2 774 | 350 | – | 61 | 153 |
| counterparty 3 | 240 | 263 | 3 520 | 1 635 | 3 686 | 2 633 |
| counterparty 4 | 1 726 | 1,188 | 1 193 | 1 671 | 94 | 32 |
| counterparty 5 | 614 | 439 | 2 291 | 1 730 | 175 | 32 |
| counterparty 6 | 2 021 | 2 047 | 667 | 663 | 122 | 491 |
| counterparty 7 | 485 | 347 | 2 132 | 1 552 | 231 | 1 397 |
| counterparty 8 | 599 | 895 | 1 683 | 1 378 | 350 | 317 |
| counterparty 9 | 467 | 617 | 1 080 | 922 | 50 | 284 |
| counterparty 10 | 167 | 159 | 802 | 549 | 6 | 2 |
In 2019, interest and commission income on the transactions with the 10 counterparties referred to above amounted to PLN 200 million (in 2018, PLN 158 million), and the respective interest expense amounted to PLN 29 million (in 2018, PLN 33 million). As at 31 December 2019 and as at 31 December 2018, respectively, no allowances for expected credit losses were recognized for the above-mentioned receivables.
In the opinion of the Bank, all transactions with entities related to the State Treasury are concluded on an arm’slength basis.
Related-party transactions – capital links
Transactions of the parent company with associates and joint ventures are presented in the table below. All transactions with subsidiaries, joint ventures and associates referred to below were arm’s length transactions. Repayment terms are within a range of from one month to seventeen years.
| AS AT 31 DECEMBER 2019 / ENTITY | Receivables | of which loans | Liabilities | Off-balance sheet liabilities granted |
| Centrum Elektronicznych Usług Płatniczych eService sp. z o.o. | 80 | 26 | 43 | 32 |
| „Centrum Obsługi Biznesu” sp. z o.o. | 19 | 19 | 6 | – |
| Bank Pocztowy SA | – | – | – | 1 |
| „Poznański Fundusz Poręczeń Kredytowych” sp. z o.o. | – | – | 1 | – |
| Operator Chmury Krajowej sp. z o.o. | – | – | 59 | 769 |
| Total joint ventures and associates | 99 | 45 | 109 | 802 |
| FOR THE YEAR ENDED 31 DECEMBER 2019/ ENTITY | Total income | of which interest and commission income |
Total expense | of which interest and commission income |
| Centrum Elektronicznych Usług Płatniczych eService sp. z o.o. | 508 | 468 | 125 | 125 |
| „Centrum Obsługi Biznesu” sp. z o.o. | 1 | 1 | – | – |
| Operator Chmury Krajowej sp. z o.o. | – | – | 9 | – |
| Total joint ventures and associates | 509 | 469 | 134 | 125 |
| AS AT 31 DECEMBER 2018 / ENTITY | Receivables | of which loans | Liabilities | Off-balance sheet liabilities granted |
| Centrum Elektronicznych Usług Płatniczych eService sp. z o.o. | 40 | 23 | 43 | 23 |
| „Centrum Obsługi Biznesu” sp. z o.o. | 18 | 18 | 8 | – |
| Bank Pocztowy SA | – | – | – | 1 |
| „Poznański Fundusz Poręczeń Kredytowych” sp. z o.o. | – | – | 5 | – |
| Total joint ventures and associates | 58 | 41 | 56 | 24 |
| FOR THE YEAR ENDED 31 DECEMBER 2018/ ENTITY | Total income | of which interest and commission income |
Total expense | of which interest and commission income |
| Centrum Elektronicznych Usług Płatniczych eService sp. z o.o. | 463 | 457 | 137 | 137 |
| „Centrum Obsługi Biznesu” sp. z o.o. | 1 | 1 | – | – |
| Total joint ventures and associates | 464 | 458 | 137 | 137 |
Related-party transactions – personal links
As at 31 December 2019, six entities were related to the Group through the key management personnel of PKO Bank Polski SA or close family members of the key management personnel. As at 31 December 2018 it was six entities. In 2019 and in 2018, no transactions were conducted between the Group and those entities.