Opinion of the European Central Bank of 27 August 2007 at the request of the Polish Minister for Finance on a draft law amending the Law on the Bank Guarantee Fund (CON/2007/26)
Date: 2007-08-27
Institutions: European Central Bank
Subjects: Poland, bank deposit, guarantee, national law, public institution

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 27 August 2007 

at the request of the Polish Minister for Finance  

on a draft law amending the Law on the Bank Guarantee Fund 

(CON/2007/26) 

Introduction and legal basis 

On 5 July 2007 the European Central Bank (ECB) received a request from the Polish Minister for Finance 

for  an  opinion  on  a  draft  law  amending  the  Law  of  14  December  1994  on  the  Bank  Guarantee  Fund 
(hereinafter the ‘draft law’)1.  

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community and the third and sixth indents of Article 2(1) of Council Decision 98/415/EC of 

29 June 1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions2, as the draft law relates to Narodowy Bank Polski (NBP) and to rules applicable to 

financial institutions insofar as they materially influence the stability of financial institutions 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  amends  the  current  legal  framework  for  the  financing,  governance,  regulation  and 

supervision  of  the  Bank  Guarantee  Fund  (hereinafter  the  ‘Fund’),  which  is  a  public  law  body 

established by statute to manage the national deposit-guarantee scheme in Poland. The Fund’s main 

tasks include: 

(i) 

specifying,  for  a  given  year,  the  amount  of  money  to  be  separated  by  the  banks3  in 

connection with the obligations to establish a fund for protection guaranteed assets, as well 

1  
2  
3  

Consolidated text: Dz.U. of 19 April 2007 No 70, Item 474. 
OJ L 189, 3.7.1998, p. 42. 
Participation  in  the  deposit-guarantee  scheme  operated  by  the  Fund  is  mandatory  for  all  banks  established  in  Poland, 
including  cooperative  banks,  but  not  for  the  Polish  variety  of  credit  unions  operating  on  the  basis  of  the  Law  of 
14 December 1995 on cooperative savings and loan associations (Dz.U. of 4 January 1996 No 1, Item 2, as amended). 
Branches of non-EU banks must, and branches of EU credit institutions may, be covered by the scheme to the extent that 
their home country schemes do not ensure deposit guarantees at the level established in Polish law (Articles 2(3) and 2b 
of the Law of 14 December 1994 on the Bank Guarantee Fund (hereinafter ‘Law on the Bank  Guarantee Fund’)). For 
simplicity, the entities covered by the mandatory deposit-guarantee scheme operated by the Fund are referred to in this 
opinion as ‘commercial banks’. 

 
 
 
 
 
                                                 
as  administering  the  collection  of  the  necessary  amounts  from  such  accounts  and  ensuring 
pay-outs of the guaranteed deposits in case of their unavailability4; and 

(ii) 

providing repayable financial assistance, under statutorily defined conditions, to commercial 

banks threatened with insolvency by, among other things, issuing credit facilities, guarantees 

and  endorsements  to  such  commercial  banks,  acquiring  specified  types  of  their  loan 
portfolios and other receivables, or crediting the acquisition of bank shares or stocks5.  

The Fund’s operations are financed by, among others, annual contributions paid by the commercial 
banks6.  In  addition,  NBP  has  a  statutory  obligation  to  subsidise  the  commercial  banks’  annual 
contributions, currently at the level of 50 %7.  

1.2  The  draft  law  is  aimed  at  introducing  the  following  key  changes  to  the  model  described  above: 

(i) changes  to  the  method  of  financing  the  Fund,  by  abolishing  NBP’s  annual  contributions  and 
changing the current formula for calculating the commercial banks’ contributions8; and (ii) changes 

to  the  Fund’s  governance,  legal  status,  regulation  and  supervision,  in  particular  increasing  the 
competences of the Minister for Finance and limiting the current competences of NBP9.  

4  

5  

6  

7  

8  

9  

Article 4(1) and Articles 21 to 36 of the Law on the Bank Guarantee Fund. Contributions provided by commercial banks, 
in  case  of  the  involuntary  liquidation  of  a  bank  participating  in  the  scheme,  are  collected by  the  Fund  and  paid  into  a 
dedicated account held with NBP, from which the relevant amounts are provided to the liquidator or administrator for the 
fulfilment  of  deposit  guarantees  (Article  28(3)  and  Article  29(1)  together  with  Article  22(3)  of  the  above  Law;  and 
paragraph  33  of  the  Annex  to  the  Regulation  of  the  Council  of  Ministers  of  28  February  1995  on  the  adoption  of  the 
Statute  of  the  Bank  Guarantee  Fund  (Dz.U.  of  6  March  1995  No  21,  Item  113,  as  amended,  hereinafter  the  ‘Fund 
Statute’)).  
Article 4(2) and Articles 19 to 20a of the Law on the Bank Guarantee Fund; paragraph 4 of the Regulation of the Council 
of  Ministers  of  22  September  1999  on  the  trade  by  the  Bank  Guarantee  Fund  in  the  receivables  acquired  from  banks 
threatened with insolvency (Dz.U. of 8 October 1999 No 80, Item 904). 
Hence, the Polish deposit-guarantee scheme represents a mixed model financed both by the ex post cover for guaranteed 
deposits provided by the commercial banks in the event of the involuntary liquidation of a bank, and by a number of ex 
ante  sources,  which  include,  in  addition  to  the  commercial  banks’  annual  contributions,  contributions  to  the  Fund’s 
statutory fund paid in equal parts by NBP and the Minister for Finance, as well as income received by the Fund from its 
investments in government or NBP securities and from participation units in money market funds (Articles 13(1) to (3), 
15, 16(3) and 45 of the Law on the Bank Guarantee Fund; and paragraphs 27 to 31 of the Fund Statute).  
In  1998  NBP’s  subsidy  covered  30%  of  the  commercial  banks’  contributions.  This  was  later  raised  to  40 %  for 
1999-2000, and 50 % for later years (paragraphs (3a) and (3b), as added to Article 13 of the Law on the Bank Guarantee 
Fund by the amending laws of 20 February 1997 (Dz.U. of 14 March 1997 No 24, Item 119) and of 6 May 1999 (Dz.U. 
of 6 May 1999 No 40, Item 399), respectively). 
Article 1(10)(a) and (b) of the draft law, amending paragraph (1) and adding a new paragraph (1a) to Article 13 of the 
Law on the Bank Guarantee Fund. At the same time, the draft law proposes abolishing the current general exemption of 
the Fund from corporation tax obligations; see the amendments in Article 1(12) and Article 2 of the draft law (repeal of 
Article  18  of  the  Law  on  the  Bank  Guarantee  Fund  and  the  related  amendments  to  Article  17  of  the  Law  of 
15 February 1992 on corporation tax (consolidated text: Dz.U. of 13 July 2000 No 54, Item 654, as amended)). 
See the amendments in Article 1(2) to (9), (11) and (14) and (15) of the draft law (amendments to Articles 3(4) and (5), 
4(2a)  and  (3),  6,  7(2)  and  (3),  8(1),  9(1),  17(3),  34(4),  38(7)  and  44  of  the  Law  on  the  Bank  Guarantee  Fund  and 
amendments to Article 2(1) of the Law of 23 December 1994 on the Supreme Chamber of Control (consolidated text: 
Dz.U. of 17 August 2001 No 85, Item 937, as amended)). 

2 

 
                                                 
2. 

Financial resources of the Fund  

2.1  Compliance with the monetary financing prohibition 

The  ECB  recalls  its  stance  on  the  prohibition  on  monetary  financing,  as  expressed  in  the 

2006 Convergence Report where the ECB specified that national legislation which provides for the 

financing by a national central bank (NCB) of a public sector national deposit insurance scheme for 

credit  institutions  would  not  be  compatible  with  the  monetary  financing  prohibition,  if  it  is  not 

short  term,  does  not  address  urgent  situations,  systemic  stability  aspects  are  not  at  stake,  and 
decisions do not remain at the NCB’s discretion10. The ECB further noted that: (i) Article 43 of the 
Law on Narodowy Bank Polski11 and Article 15(6) of the Law on the Bank Guarantee Fund, which 

give NBP the power to grant credit to the Fund;  as well as (ii)  Article 13(3b) of the Law  on the 

Bank  Guarantee  Fund,  which  provides  for  annual  payment  on  behalf  of  NBP  to  the  Fund,  are 
incompatible with the Treaty provisions on monetary financing12. 

2.2  

It  is  proposed  that  the  draft  law  will  abolish  the  annual  subsidies  contributed  by  NBP  to  the 
financing  of  the  Fund13.  It  is  explained  that  this  proposal  is  motivated  by  the  need  to  ensure  full 

compatibility of the Law on the Bank Guarantee Fund with the monetary financing prohibition in 
Article 101(1) of the Treaty14. The ECB welcomes this amendment, as the abolition of the annual 

NBP  subsidies  will  ensure  that  non-compliance  with  the  monetary  financing  prohibition  in  this 

particular regard will be eliminated.  

2.3   However,  the  second  incompatibility  with  the  monetary  financing  prohibition  identified  in  the 

Convergence Report in relation to the financing of the Fund (i.e. NBP’s right to extend credit to the 

Fund)  is  not  addressed  by  the  draft  law.  In  particular,  Article  15(6)  of  the  Law  on  the  Bank 

Guarantee Fund provides that one source of financing of the Fund is ‘funds from a credit facility 

extended by NBP on the conditions agreed with the Fund’. In its present form, the Law on the Bank 

10  

11  
12  

13  
14  

See the ECB Convergence Report, December 2006, ‘Introduction and executive summary’, Section 2 (‘Compatibility of 
national legislation with the Treaty’), Subsection 2.4 (‘Prohibition on monetary financing and privileged access’), under 
the heading ‘Financial support for deposit insurance and investor compensation schemes’, p. 30. 
Law on Narodowy Bank Polski of 29 August 1997 (consolidated text: Dz.U. of 1 April 2005 No 1, Item 2, as amended). 
See  ECB  Convergence  Report,  December  2006,  Chapter  2  (‘Compatibility  of  national  legislation  with  the  Treaty’), 
Section  7  (‘Poland’),  Subsection  7.3  (‘Monetary  financing  and  privileged  access’),  p.  229.  In  the  same  passage  it  is 
pointed out that in its current formulation NBP’s right to issue refinancing credit to commercial banks is incompatible 
with the monetary financing prohibition. 
Article 1(10)(c) of the draft law, repealing paragraphs (3) and (3a) of Article 13 of the Law on the Bank Guarantee Fund. 
See  the  third  paragraph  of  the  explanatory  memorandum  accompanying  the  draft  law,  and  the  second  and  third 
paragraphs of the letter of Minister for Finance of 26 July 2007 requesting the ECB’s opinion. 

3 

                                                 
Guarantee  Fund  specifies  certain  further  conditions  regarding  this  source  of  financing15.  These 

conditions,  however,  fall  short  of  ensuring  compatibility  with  the  prohibition  on  monetary 

financing specified by the Treaty. The Fund is a public law body established by statute to manage 

the national deposit-guarantee scheme in Poland, hence it qualifies as a body governed by public 

law  within  the  meaning  of  Article  101(1)  of  the  Treaty.  NBP’s  extension  of  credit  to  the  Fund 

under Articles 15(6) and 34(3) of the Law on the Bank Guarantee Fund and Article 43 of the Law 

on Narodowy Bank Polski constitutes a ‘credit facility’ within the meaning of Article 101(1) of the 

Treaty. Therefore, the ECB considers that these provisions remain incompatible with Article 101 of 

the Treaty. 

2.4  Calculation of the commercial bank contributions  

The  draft  law  proposes  changing  the  current  formula  for  calculating  the  annual  contributions  of 
commercial banks to the Fund16. The change is explained as being necessary in order to adapt the 

Polish deposit-guarantee scheme to the new risk-measurement and capital requirements framework 
introduced by the Capital Requirements Directives, as recently implemented in Poland17.  

2.5  As already noted by the ECB, deposit protection is an important element of the financial safety net 
and  therefore  contributes  to  safeguarding  financial  stability18.  Further,  according  to  international 

standards,  sound  funding  arrangements  are  critical  to  the  effectiveness  of  deposit-guarantee 
schemes  and  the  maintenance  of  public  confidence  in  the  banking  system19.  At  the  same  time, 

Directive  94/19/EC  of  the  European  Parliament  and  of  the  Council  of  30  May  1994  on  

15  

16  

17  

18  

19  

The President of NBP may extend credit to the Fund if: (i) the amounts of claims received under the deposit-guarantee 
scheme  exceed  the  amounts  which  the  commercial  banks  are  obliged  to  transfer  to  the  Fund  in  the  event  of  the 
involuntary liquidation of a bank participating in the scheme (in accordance with rules set out in Articles 15(2), 25(2), 
28(2)(2)  and  29(1)  of  the  Law  on  the  Bank  Guarantee  Fund);  and  (ii)  the  Fund’s  own  financial  resources  have  been 
exhausted.  The  amount  of  such  credit  extended  by  NBP  may  not  exceed  half  the  Fund’s  receipts  from  annual 
contributions  payable  by  the  commercial  banks.  The  credit  may  only  be  used  to  fulfill  the  Funds’  task  of  protecting 
guaranteed deposits. Any funds recovered by the Fund from the insolvent estates of liquidated commercial banks must be 
applied in the first place to the repayment of money paid out under NBP’s credit arrangements and the restoration of the 
Fund’s  assets  derived  from  the  contributions  of  NBP  and  the  Minister  for  Finance  to  the  Fund’s  statutory  fund 
(Articles 15(6),  16(2),  34(3)  and  35(2)  of  the  Law  on  the  Bank  Guarantee  Fund;  Article  43  of  the  Law  on  Narodowy 
Bank Polski; and paragraph 33(1) and (2)(6) of the Fund Statute).  
Article 10(13)(a) and (b) of the draft law, amending Article 13(1) and (2) of the Law on the Bank Guarantee Fund. Under 
the  current  formula,  each  commercial  bank’s  contribution  is  computed  as  a  specified  percentage  of  the  risk-weighted 
balance sheet assets, guarantees and endorsements, as well as certain other risk-weighted non-balance sheet obligations. 
The draft law proposes to link the level of each bank’s contributions not to its risk-weighted assets and obligations but to 
the level of its capital requirements, as defined under the regime introduced by Directive 2006/48/EC of the European 
Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions 
(recast)  (OJ  L  177,  30.6.2006,  p.  1)  and  Directive  2006/49/EC  of  the  European  Parliament  and  of  the  Council  of 
14 June 2006 on the capital adequacy of investment firms and credit institutions (recast) (OJ L 177, 30.6.2006, p. 201), 
hereinafter referred to jointly as the ‘Capital Requirements Directives’.  
The Capital Requirements Directives (see footnote 16) have been implemented in Poland by the Law of 26 January 2007 
amending the Law on banking (Dz.U. of 9 March 2007 No 42, Item 272) and by resolutions of the Banking Supervision 
Commission (Nos 1 to 6/2007 of 13 March 2007). In the ninth paragraph of the explanatory memorandum accompanying 
the draft law, and in the second and fourth paragraphs of the letter of Minister for Finance of 26 July 2007 requesting the 
ECB’s  opinion,  it  is  stated  that  the  changes  in  the  calculation  method  proposed  by  the  draft  law  are  linked  to  the 
implementation of the Capital Requirements Directives.  
Paragraph 8 of ECB Opinion CON/2005/50 of 1 December 2005 at the request of Národná banka Slovenska on a draft 
law amending the Act No 118/1996 Coll. on the protection of bank deposits and on amendments to certain laws, as last 
amended. 
Financial Stability Forum, ‘Guidance for Developing Effective Deposit Insurance Systems’, September 2001, point V.4 
(‘Funding arrangements’), p. 26. 

4 

                                                 
deposit-guarantee schemes20 does not prescribe a method for financing deposit-guarantee schemes, 

as  long  as:  (i)  the  costs  of  financing  are  borne,  in  principle,  by  credit  institutions  themselves; 

(ii) the  financing  capacity  of  the  scheme  is  in  proportion  to  credit  institutions’  liabilities;  and 
(iii) the  stability of  the  banking  system  of  the  Member  State  concerned  is  not  jeopardised21.  Any 

change to the current system should respect these principles. 

3. 

Governance, regulation and supervision of the Fund  

3.1  Under  the  current  provisions,  the  Fund’s  governing  bodies  are:  (i)  the  Fund  Council,  whose 

members  are  appointed  by  the  President  of  NBP,  the  Minister  for  Finance  and  the  Polish  Banks 
Association;  and  (ii)  the  Management  Board,  appointed  by  the  Fund  Council22.  The  Council  of 

Ministers, acting on requests of the Minister for Finance in agreement with the President of NBP, 
has legislative competence over the general regulation of the Fund’s activities23. The Minister for 

Finance exercises overall supervision of the Fund, based on the criteria of legality and compliance 
with the Fund Statute24.  

3.2  The draft law is aimed at making certain changes to the current regime which, among other things, 

would result in: (i) reducing the number of the Fund Council’s members appointed by the President 

of  NBP  from  four  to  three,  and  limiting  the  role  of  the  President  of  NBP  in  the  selection  of  the 
Fund Council’s Chairman25; (ii) eliminating the current requirement for candidates for the Fund’s 
Management  Board  to  have  five  years  professional  experience  in  banking26;  (iii)  assigning  the 

regulatory powers for the Fund to the Minister for Finance, who will have to seek the opinion of 
the  President  of  NBP  in  certain  cases27;  and  (iv)  strengthening  the  supervisory  powers  exercised 

20  
21  
22  

23  

24  
25  

26  

27  

OJ L 135, 31.5.1994, p. 5. 
See the twenty-third recital of Directive 94/19/EC. 
The President of NBP appoints four members of the Fund Council (until 1998 – three members), the Minister for Finance 
and the Polish Banks Association each appoint three Fund Council members (Articles 5(1), 6(3) and 9(1) to (3) of the 
Law on the Bank Guarantee Fund). 
See  Articles  3(4),  4(2a)  and (3) of  the Law  on  the  Bank  Guarantee  Fund.  Additionally,  on  specific  issues  listed in  the 
Law, the regulatory competence is exercised by the Minister for Finance or the President of NBP (see footnote 27).  
Article 3(5) of the Law on the Bank Guarantee Fund. 
The Fund Council’s Chairman is currently appointed by the Prime Minister on the joint recommendation of the Minister 
for Finance and the President of NBP; the draft law provides for appointment by the Minister for Finance after consulting 
the  President  of  NBP  (Article  1(6)  of  the  draft  law,  amending  Article  6(2)  to  (3)  of  the  Law  on  the  Bank  Guarantee 
Fund). 
Under  the  proposed  provision,  candidates  would  only  have  to  have  ‘appropriate’  higher  education  and  professional 
experience (Article 1(9) of the draft law, amending Article 9(2) of the Law on the Bank Guarantee Fund).  
Under  the  provisions  of  the  draft  law, the  President  of  NBP  would  express  a  non-binding  opinion  on  draft  regulations 
presented by the Minister for Finance in relation to: (i) the adoption of the Fund Statute; (ii) the conditions for the Fund’s 
trading in the loans acquired from commercial banks threatened with insolvency; (iii) any additional tasks of the Fund 
concerning the provision of assistance to commercial banks; (iv) the remuneration of the Fund Council’s members; and 
(v) the commercial banks’ reporting obligations to the Fund (Article 1(3)(a), (5)(b) and (c), (6) and (14) of the draft law, 
amending Articles 3(4), 4(2a) and (3), 6(4) and 38(7) of the Law on the Bank Guarantee Fund). Currently, proposals for 
regulations in the above areas must either be agreed between the Minister for Finance and the President of NBP or they 
are adopted exclusively by NBP (in the case of regulations referred to under (iv) and (v) above). Additionally, the draft 
law  eliminates  the  President  of  NBP’s  right  to  give  an  opinion  on  draft  regulations  relating  to  the  emergency  rates  of 
commercial banks’ contributions to the Fund, as set by the Council of Ministers (Article 1(13) of the draft law, amending 
Article 34(4) of the Law on the Bank Guarantee Fund).  

5 

 
                                                 
over the Fund by the Minister for Finance by, among other things, allowing the Minister to request 

information and documents directly from the Fund’s staff and contractors and not merely from the 
governing bodies of the Fund28. Furthermore, supervision of the Fund by the Supreme Chamber of 
Control (the state auditing body) is introduced29. 

3.3  The ECB repeats its earlier observation that central banks are in general in the best position to take 

on  responsibility  for  financial  stability,  given  their  insight  into  money  and  financial  market 
developments and their involvement in payment systems and monetary policy operations30. At the 

same time, deposit-guarantee schemes are a key element of the financial safety net. Therefore, the 

governance  framework  should  ensure  that  the  important  function  of  such  schemes  is  carried  out 
professionally  and  efficiently31.  Moreover,  effective  coordination  with  the  overall  role  of  central 

banks  in  safeguarding  financial  stability  should  be  ensured.  This  aim  may  be  achieved  through, 

among  other  things,  maintaining  an  adequate  level  of  involvement  of  the  central  bank  in  the 

governance and regulation of the national deposit-guarantee scheme.  

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 27 August 2007. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

28  
29  

30  

31  

Article 1(4) of the draft law, adding a new Article 3a to the Law on the Bank Guarantee Fund. 
Under the current rules, the Fund’s financial statements are audited by authorised auditors selected by a tender procedure 
by the President of NBP, having sought the opinion of the Fund Council (Article 17(2) of the Law on Bank Guarantee 
Fund). In order to allow the parallel exercise of auditing competences by the Supreme Chamber of Control, the draft law 
proposes to change the definition of the Fund’s public law status (Article 1(15) and Article 3 of the draft law, respectively 
amending  Article  44  of  the  Law  on  Bank  Guarantee  Fund  and  Article  2(1)  of  the  Law  of  23  December  1994  on  the 
Supreme Chamber of Control (consolidated text: Dz.U. of 17 August 2001 No 85, Item 937, as amended)). 
See e.g. paragraph 7 of ECB Opinion CON/2001/10 of 25 May 2001 at the request of the Austrian Ministry of Finance on 
a  draft  Federal  law  establishing  and  organising  the  financial  market  supervisory  authority  (title  shortened).  Cf.  also 
Article 3(2)(6) of the Law on Narodowy Bank Polski (see footnote 11 above). 
See Financial Stability Forum, ‘Guidance for Developing Effective Deposit Insurance Systems’, September 2001, point 
V.1(c)  (‘Basic  governance  arrangements’),  p.  19.  According  to  these  recommendations,  the  governing  body  of  a  
deposit-guarantee  scheme  should  include  individuals  with  the  requisite  knowledge  to  allow  them  to  understand  the 
environment in which the scheme operates. 

6