EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 9 March 2009 
at the request of the Polish Minister for Finance  
on a draft law on recapitalisation of certain financial institutions 
(CON/2009/19) 
 
Introduction and legal basis  
On 19 February 2009 the European Central Bank (ECB) received a request from the Polish Minister for 
Finance for an opinion on a draft law on the recapitalisa tion of certain financial institutions (hereinafter 
the ‘draft law’).  
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the sixth indent of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft law contains rules applicable  to financial institutions insofar as they 
materially influence the stability of financial ins titutions and markets. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion.  
 1.  Purpose of the draft law 1.1 The draft law provides for public intervention inst ruments to address potential liquidity or solvency 
difficulties that may arise in the financial mark et by way of enabling public authorities to: 
(i) provide a State guarantee to market-initiated recapitalisation operations (hereinafter a ‘State 
recapitalisation guarantee’); and (ii) initiate compul sory State takeovers of a distressed financial 
institution (hereinafter a ‘compulsory State takeover’)
2. The measures provided for in the draft law 
may be adopted until 31 December 20103 in relation to two categories of financial institutions 
established in Poland: domestic banks4 and domestic insurance companies5, excluding mutual 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
2  See Article 1 of the draft law. See explan atory memorandum to the draft law, p. 1. 
3  See Article 25 of the draft law. 
4  Article 2(1) of the draft law, referring to Article 4(1 )(1) of the Law on banking of 29 August 1997 (consolidated text: 
Dziennik Ustaw  (Dz.U.) of 12 June 2002 No 72, Item 665, as amende d). The term ‘bank’ covers credit institutions 
registered in Poland, excluding Polish credit unions ope rating pursuant to the Law of 14 December 1995 on cooperative 
savings and loan associations (Dz. U. of 4 January 1996 No 1, Item 2). The term ‘credit institutions’ as used in Polish law 
only relates to European Economic Area (EEA) credit instit utions from outside Poland. Non-EEA credit institutions are 
2 insurance associations. They will complement ot her measures, which will be introduced on the 
basis of the Law on State Treasury support to financial institutions (hereinafter the ‘Law on State support’).  
1.2 Specifically, the draft law will enable the Minist er for Finance to provide State Treasury guarantees 
facilitating recapitalisation by market entities of dist ressed financial institutions in relation to which 
rehabilitation proceedings have been initiated
6. Such State recapitalisation guarantees will result in 
the State Treasury acquiring shares, bonds or othe r debt instruments issued by the recapitalised 
financial institution in cases where such instrument s are not acquired by market entities (existing 
shareholders or third persons)7. The Minister for Finance will issue State recapitalisation 
guarantees under the following cumulative conditions: (a) on application by the financial institution 
and by way of an agreement with the institution concluded after consulta tion with the Financial 
Supervision Commission (FSC) and the President  of Narodowy Bank Polski (NBP); (b) on 
approval by the FSC of the relevant rehabilitation plan8; and (c) subject to certain statutory 
limitations as to the scope and amount of the guarantees9. The provision of a guarantee will be 
remunerated by way of commission charged to the recapitalised financial institution, the amount of 
which will be determined in accordance with th e rules specified in the draft law and the 
implementing provisions to be adopted by the Minister for Finance10. 
1.3 According to conditions linked to the provision of State recapitalisation guarantees, the guarantee 
agreement will also determine , inter alia , the power of the Minister for Finance to appoint 
members of the recapitalised financial institutio n’s bodies and the Minister’s influence on the 
financial policy of such institution, as well as li mitations on the remuneration that the institution 
may offer to its management11. Where a State recapitalisation guarantee is exercised, i.e. if the 
State Treasury acquires financial instruments issu ed by the recapitalised financial institution, the 
FSC may, acting on a request of the Minister for Finance, appoint a guardian to oversee the realisation of the rehabilitation plan
12. Furthermore, in the event of a breach of the conditions of a 
State recapitalisation guarantee, the State Treasury may demand the redemption of its holdings of financial instruments issued by the recapitalised financial institution and/or  apply to the FSC to 
                                                                                                                                                             
referred to under Polish law as ‘foreign banks ’ (Article 2, Article 4(1) and (3) and Article 4(17) to (20) of the Law on 
banking of 29 August 1997.  
5  Article 2(1) of the draft law, referring to Article 2(1)(5 ) of the Law of 22 May 2003 on insurance activities (Dz. U. 
No 124, item 1151, as amended). 
6  See Article 1(1) and Articles 3 to 13 of the draft law. 
7  In cases where a maximum of 50% of the total amount of issu e has been acquired by other investors, the State Treasury 
will acquire the shares, bonds or debt instruments which were not acquired by other investors. Alternatively, in cases 
where other investors have acquired more than 50% of the to tal, the State Treasury will pur chase additional bonds or debt 
securities issued by the financial ins titutions in the value of the difference between the guaranteed amount and the total 
value of shares acquired by other investors. See Article 5(1) and (2) of the draft law. 
8  See Articles 3(1), 4(1) and 6(1) of the draft law. 
9  An issue of bonds or bank debt securities may only be covered by a State recapita lisation guarantee if the issue fulfils the 
criteria for subordinated debt. The amount  of the State recapitalisation guarant ee may not exceed th e amount of increase 
of the financial institution’s own funds, as provided for in  the rehabilitation plan; see Article 4 of the draft law. 
10  See Articles 11 and 12 of the draft law. 
11  See Article 6(5) of the draft law. 
12  See Article 8 of the draft law. 
3 place the institution under compulsory administration, or carry out a compulsory State takeover of 
the institution13.  
1.4 Finally, the draft law permits a compulsory ta keover of a distressed financial institution by the 
State Treasury if there is a threat to the solven cy of a financial institution and such takeover is 
justified on the grounds of financial system stability14. A compulsory State takeover requires the 
adoption of a decision by the Council of Ministers following consultation with the FSC and the President of the NBP
15. The State Treasury has to dispose of  the shares it has acquired as a result of 
a takeover once financial stability is restored, and in  any event no later than within three years of 
their acquisition with up to two additional extensions of one year each being possible16. 
 2. General observations 2.1 The ECB notes that the draft law is the second Polish law providing for State intervention in the 
financial sector to mitigate the current fina ncial turmoil alongside the Law on State support
17, and 
therefore reminds the consultin g authority of the statements expressed in ECB Opinion 
CON/2008/8018 on the Law on State support and in its other recent opinions on draft national laws 
in other Member States relating to emergency measures19. The ECB also notes that the common 
principles to guide State actions have been highlig hted in the conclusions adopted at the Ecofin 
meeting on 7 October 200820. On 12 October 2008 the Heads of St ate of the euro area issued a 
‘Declaration on a concerted European action plan of the euro area countries’21 (hereinafter the 
‘Declaration’), in which they agreed on common pr inciples to be followed by the EU and euro area 
governments, central banks and supervisors to avoid national measures adversely affecting the 
functioning of the single market and other Memb er States. This coordinated approach includes 
initiatives aimed at ensuring appropriate liquidity , facilitating the funding of banks by various 
means, providing additional capital resources to fi nancial institutions and recapitalising distressed 
banks. The European Council endorsed the se principles for all Member States on 
                                                 
13  See Article 9(1) of the draft law. 
14  See Article 14(1) of the draft law. 
15  See Article 14(1) of the draft law. 
16  See Article 14(9) of the draft law. 
17  This law, as adopted by the Parliament on 12 February 2009 and signed by the President on 25 February 2009, provides 
for the following measures: a State guarantee for repayment of a refinancing loan extended to a bank by NBP or of a 
credit facility or loan provided within a line of credit extende d by a bank to another bank, loans of Treasury securities to 
financial institutions and preferential sales of Treasury securities to financial institutions. 
18  ECB Opinion CON/2008/80 of 28 November 2008 at the request of the Polish Minister of Finance on a draft law on the 
provision of State Treasury support to financial institutions.  
19  See in particular the ECB opinions listed in footnote 29 below.  
20  According to these principles: (a) interventions should be timely and the support should in pr inciple be temporary; (b) the 
interests of taxpayers should be protected; (c) existing share holders should bear the due consequences of the intervention; 
(d) the Government should be in a position to bring about a change of management; (e) management should not retain 
undue benefits; (f) governments may have, inter alia , the power to intervene in remuneration; (g) legitimate interests of 
competitors must be protected, in particular through the St ate aid rules; and (h) negative spillover effects should be 
avoided. 
21  Available on the website of the French Presidency at www.ue2008.fr. 
4 16 October 200822. The ECB notes that coordination of nati onal measures is already taking place at 
European and international level23.  
2.2 Concerning the issue of the application of State aid rules to measures taken by the Member States 
in connection with financial institu tions in the context of the ongoing  financial crisis, the ECB also 
draws the consulting authority’s attention to the importance of ensuring that the proposed 
arrangements comply with the relevant Community law provisions, in particular that they avoid 
undue distortions of competition, and with the criteria recently laid down by the Commission in its guidance on compliance by financial sector support schemes with EU State aid rules
24, as well as 
the subsequent Commission’s guidance speci fically targeting recapitalisation measures25. 
2.3 The ECB notes that under the draft law the Ministry  of Finance proposes to consult the President of 
NBP prior to deciding to support a domestic financia l institution. While appreciating the draft law’s 
recognition of NBP’s expertise in this field, the ECB also expect s that NBP’s involvement in the 
procedure provided for in the draft law should not  extend beyond the provision of advice and that it 
will otherwise comply fully with the prohibition on monetary financing laid down in Article 101(1) 
of the Treaty, read in conjunction with Counc il Regulation (EC) No 3603/93 of 13 December 1993 
specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b(1) of the Treaty
26. In addition, it is also expected that NBP will perform these advisory tasks in 
connection with State support measures in a manne r fully compatible with its institutional and 
financial independence, thereby safeguarding the proper performance of its tasks under the Treaty 
and the Statute of the European System of Central Banks and of the European Central Bank27. 
 
                                                 
22  See also paragraph 2.2 of ECB Opinion CON/2008/81 of 1 De cember 2008 at the request of the Hungarian Ministry of 
Finance on a draft law on strengthening the financial intermediary system. 
23  See paragraph 2.1 of ECB Opinion CON/2008/80. 
24  See the ‘Communication from the Commission – The application of State aid rules to measures taken in relation to 
financial institutions in the context of the current global fi nancial crisis’ of 13 October 2008, OJ C 270, 25.10.2008, p. 8 
(hereinafter the ‘Commission’s communication on rescue measures’), in particular its Section 4 (Recapitalisation of 
financial institutions). See also the following: (a) para graph 3.8 of ECB Opinion CON/2008/68 of 13 November 2008 at 
the request of the Finnish Ministry of Finance on a dr aft government proposal for laws amending the Law on the 
Government Guarantee Fund and the La w on credit institutions; (b) paragraph 3.1.3 of ECB Opinion CON/2009/3 of 
8 January 2009 at the request of the Slovenian Ministry of Fi nance on a draft decree laying down criteria and conditions 
for the implementation of State capital investments and for the conversion of St ate claims into capital shares under 
Article 81.a of the Law on public finan ce; and (c) paragraph 3.3 of ECB Opin ion CON/2009/6 of 26 January 2009 at the 
request of the Danish Ministry of Ec onomic and Business Affairs on a proposal fo r a Law on State investments in credit 
institutions and a proposal for a Law am ending the Law on financial stability. 
25  ‘Communication from the Commission – The recapitalisation of financial institutions in the current financial crisis: 
limitations of aid to the minimum necessary and safegua rds against undue distortions of competition’, OJ C 10, 
15.1.2009, p. 2 (hereinafter the ‘Commission’s communication on recapi talisation measures’). 
26  OJ L 332 , 31.12.1993, p. 1. 
27  See paragraph 3.3 of ECB Opinion CON/2008/79 of 27 Novemb er 2008 at the request of the Greek Ministry of Economy 
and Finance on a draft law on enhancing liquidity of the econo my to address the impact of the international financial 
crisis and on a draft decision on its implementation. Also para graph 3.10 of ECB Opinion CON/2008/81 and paragraphs 
3.2.2 and 3.2.3 of paragraph 3. 1.3 of ECB Opinion CON/2009/3. 
5 3. Specific observations 
3.1 Eligibility for support and takeover measures  
 The ECB understands that subsidiaries of foreign fi nancial institutions are included in the scope of 
‘financial institutions’ as defined in Ar ticle 2(1) of the draft law and that they are eligible to benefit 
from the measures provided for by the draft law. Th is is in line with the Commission’s guidance on 
compliance by the financial sector support schemes with State aid rules28. The ECB welcomes the 
above provision, as it avoids distortion of the leve l playing-field for domestic financial institutions 
and subsidiaries of foreign institutions. 
3.2 The draft law and coordination of the policy of the Member States  
 In line with the Declaration, Member States have to  act in a coordinated manner to avoid the risk of 
significant differences in national implementation creating distortions in global banking markets. 
The euro area Heads of State also acknowledged the need to work in cooper ation with the ECB so 
as to ensure consistency with the management of  liquidity by the Eurosystem and compatibility 
with the operational framework of the Eurosyst em. In this respect, the ECB emphasises that 
uncoordinated decisions among Member  States should be avoided as they may lead to significant 
differences in the treatment of financial institutio ns between Member States. This remark also 
applies to measures relating to state capital investments. 
3.3 Conditions for State capital investments  
The ECB takes the opportunity to reiterate the poi nts made in its previous opinions regarding 
recapitalisations29, as also subsequently published in a separate document30. In this respect the ECB 
notes that the recapitalisation measures consider ed in Member States should be aimed at 
strengthening the capital position of fundamentally sound financial institutions  in order to improve 
the functioning and stability of the banking syst em and to ensure the proper financing of the 
                                                 
28  See the Commission’s communication on rescue  measures, paragraph 18 of which specifi es that ‘The eligibility criteria 
of financial institutions … mu st be objective, taking due account of their role in the relevant banking system and the 
overall economy, and non-discrimi natory so as to avoid undue distortive effe cts on neighbouring markets and the internal 
market as a whole. In application of the principle of non discrimination on the grounds of nationality, all institutions 
incorporated in the Member State concerned, including subsidia ries, and with significant activities in that Member State 
should be covered by the scheme’. S ee also paragraph 3.1 of ECB Opini on CON/2008/79 and paragraph 3.1 of ECB 
Opinion CON/2008/81. 
29  See ECB Opinion CON/2008/44 of 3 October 2008 at the request of the Irish Minister for Finance on a draft Credit 
Institutions (Financial Support) Bill 2008; ECB Opinion C ON/2008/54 of 17 October 2008 at th e request of the Danish 
Ministry of Economic and Business Affairs on a proposed  Law on financial stability; ECB Opinion CON/2008/55 of 
20 October 2008 at the request of the Austrian Ministry of Fi nance on draft legal m easures to ensure th e stability of the 
Austrian financial market; E CB Opinion CON/2008/58 of 23 October 2008 at the request of the Banca d’Italia on behalf 
of  the Italian Ministry for Economic Affairs and Finance on two Decree-Laws containing ur gent measures to guarantee 
the stability of the banking system and the continuity of the provision of credit; ECB Opinion CON/2008/75 of 
24 November 2008 at the request of the Fi nnish Ministry of Finance on a draft la w on state capital i nvestment in deposit 
banks; ECB Opinion CON/2008/79; ECB Opinion C ON/2008/81; ECB Opinion CON/2009/3; ECB Opinion 
CON/2009/6; ECB Opinion CON/2009/11 of 9 February 2009 at the re quest of the Latvian Ministry of Finance on a draft 
regulation on fair compensation granted to a bank or its  shareholders; and ECB Opin ion CON/2009/16 of 25 February 
2009 at the request of the Irish Minister for Finance on a draft National Pensions Re serve Fund (Amendment) and 
Miscellaneous Provisions Bill 2009. 
30  See Recommendations of the Governing Council of the Euro pean Central Bank on the pricing of recapitalisations of 
20 November 2008, as published on 19 December 2008 on the ECB’s website at www.ecb.europa.eu (section 
‘Publications’) (hereinafter the ‘Recommendations’). 
6 economy. In particular, a consistent approach s hould be adopted in defi ning the conditions for 
recapitalisations and the pricing of the instrument s intended to provide Tier 1 capital to financial 
institutions. The ECB underlines the importance of appr opriate pricing for recapitalisations in terms 
of the goals of enhancing the stability of the financ ial system, facilitating a return to normal market 
conditions and ensuring the pr oper financing of the economy.  The ECB also highlights that the 
pricing conditions for capital support should be ri sk-based and market-oriented, determined by 
taking into consideration the specific risk of bot h the specific instrument chosen for injecting 
capital and the institution concerned. Specific features  of the instruments for capital injections, such 
as preference shares, should be appropriately chosen  so that, while encouraging an early end to the 
State’s capital support of banks, they should not r esult in an excessive increase in the cost of 
capital. 
3.4 Against this background, the ECB has the followi ng remarks. First, the ECB notes that pursuant to 
the draft law the State may issue guarantees in order to facilitate recapitalisation by market entities of distressed financial institutions in relation to which rehabilitation proceedings have been 
initiated. The ECB therefore understands that these guarantees, if activated, would lead to capital 
injections by the State into distressed financial institutions. In this respect, the ECB underlines that, 
according to the Recommendations and in line with paragraph 9 of the Declaration, the 
recapitalisation measures considered by Member States should be aimed at strengthening the capital position of distressed but fundament ally sound financial institutions. 
3.5 Second, as regards the pricing of State recapita lisation guarantees, the ECB reminds the consulting 
authority that it is crucial to ensure a level playing-field for the harmonisation of the price determination of such guarantees within the euro area and the EU; moreover, that the price of a 
State recapitalisation guarantee is risk-based and market-oriented and determined on the basis of the costs of a corresponding guarantee in the market. In this context, the ECB welcomes Articles 11 
and 12 of the draft law and the implementing provisions to be adopted by the Minister for Finance, which make the applicable commission dependent, inter  alia, on the beneficiary’s risk rating.  
3.6 Third, the ECB also reminds the Polish authoriti es that beneficiary financial institutions may not 
profit from undue use of their guaranteed status to engage in a heightened level of activities that 
distort the market. In this regard, the ECB re iterates the importance of establishing appropriate 
safeguards such as limits on the marketing of financ ial products or on the expansion of activities on 
the basis of State guarantees. 
3.7 Fourth, in line with the Declaration, the EC B also emphasises that harmonisation regarding the 
expiry of national financial support schemes across the EU is crucial, as application of such 
schemes is aimed at restoring normal market cond itions. In this context, reiterating its position 
taken in previous opinions
31, the ECB welcomes the fact that the draft law expressly provides that 
                                                 
31  See e.g. paragraph 3.1.3 of ECB Opin ion CON/2009/3, paragraph 3.3 of ECB Opinion CON/2009/6 and paragraph 3.1.3 
of ECB Opinion CON/2009/16 of 25 February 2009 at the reques t of the Irish Minister for Finance on a draft National 
Pensions Reserve Fund (Amendment) an d Miscellaneous Provisions Bill 2009. 
7 the State’s participation in financial instituti ons resulting from a compulsory State takeover is 
temporary and that the State’s role as a shareholde r is limited both on the basis of a period of time 
and the development of market conditions32. The ECB also welcomes the introduction of a precise 
deadline, 31 December 2010, for the issuance of State recapitalisation guarantees and carrying out 
compulsory State takeovers33. In this context, the ECB suggests introducing a more precise 
reference to issuance of State recapitalisation guara ntees in Article 25 of the draft law by extending 
the reference to Article 3(1) in  conjunction with Article 4(1). 
In contrast, it appears from the draft law that  once State recapitalisation guarantees are exercised, 
the related capital injection by the State into th e financial institutions is not intended to be a 
temporary measure that would only remain in force for the duration of the present crisis or until a 
given point in time in the future. In this resp ect, the ECB suggests introducing limitations on State 
ownership of shares acquired as a result of exer cising the recapitalisation guarantee pursuant to 
Article 5(1) of the draft law, which are similar to those applicable to shares acquired by the State in 
result of a compulsory State takeover pursuant to Ar ticle 14 of the draft law. In this context, the 
ECB notes that the step-up clause in Article 7(3) of the draft law regarding dividends paid on preferred shares of the State Treasury provides an  incentive for the issuer to redeem the shares 
acquired by the State Treasury as soon as possible
34. However, for such a step-up clause to be fully 
effective, a specific provision in the articles of association of the financial institution in question would be necessary to enable it to redeem such sh ares at its own discretion if the capital injection 
provided by the State Treasury is no longer needed
35. The ECB notes that in this regard, by 
establishing such an open-ended schem e, the draft law is not fully in line with the Declaration, 
which clearly draws attention to the need fo r any domestic support schem es and for the legal 
framework that provides for them to be temporar y in nature, even if these can be extended or 
renewed36. 
3.8 Technical remarks 
 The ECB points to a possible omission in Article 15(2) of the draft law, which applies some effects 
of placing the financial institution under compulso ry administration only to bodies of a bank. It 
seems that insurance compan ies are also intended to be covered by this provision. For reasons of 
                                                 
32  See Article 14(9) of the draft law. 
33  See Article 25 of the draft law. 
34  See the Commission’s communication on re capitalisation measures, paragraph 19 of which specifies that ‘…pricing 
conditions should provide an incentive for th e bank to redeem the State as soon as th e crisis is over’. See also paragraph 7 
of the Recommendations and paragra ph 3.2 of ECB Opinion CON/2008/79.  
35  One possible way of achieving this effect would be amend the list of required elements in the guarantee agreement 
specified in Article 6(5) of the draft law to include a clause enabling compulsory redemption of shares held by the State 
Treasury, as provided for under Article 359 of the Code of Commercial Companies of 15 September 2000 (Dz.U. of 
8 November 2000 No 94, it em 1037, as amended). 
36  See statement in the Declaration that ‘… In all cases, these actions will be designed in order to avoid any distortion in the 
level playing-field and possible abuse at the expense of non beneficiaries of these arrang ements. As a consequence the 
scheme will be limited in amount, temporary  (emphasis is ours) and will be applied under close scrutiny of financial 
authorities …’. See also Commission’s communi cation on rescue meas ures, paragraph 24. 
8 clarity the ECB therefore suggests replacing the refere nces to ‘bank’ in Article 15(2) by references 
to ‘financial institution’. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 9 March 2009. 
  
[signed] 
The President of the ECB 
Jean-Claude TRICHET