Opinion of the European Central Bank of 9 September 2010 on amendments to the legal framework for the operation of Bank Gospodarstwa Krajowego (CON/2010/70)
Date: 2010-09-09
Institutions: European Central Bank
Subjects: Poland, central bank, credit rating, financial stability, national budget, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 9 September 2010 

on amendments to the legal framework for the operation of Bank Gospodarstwa Krajowego 

(CON/2010/70) 

Introduction and legal basis 

On 16 August 2010 the European Central Bank (ECB) received a request from the Polish Parliament’s 

Sejm for an opinion on a draft law (hereinafter ‘the draft law’) amending the Law of 14 March 2003 on 
Bank Gospodarstwa Krajowego (hereinafter the ‘Law on BGK’)1.  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of  the  European  Union  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 

contains  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  Bank  Gospodarstwa  Krajowego  (BGK)  is  the  only  Polish  credit  institution  established  by 
legislation as a State bank3. Its main activities include supporting the government’s socio-economic 

programmes,  as  well  as  local  self-government  and  regional  development  projects.  Within  this 

scope,  BGK  provides  banking  services  to  public  entities  and  several  public  funds  established  for 

special  purposes,  including  those  established  to  distribute  Union  funds.  As  a  specific  financial 

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Dz. U. of 2003, No 65, item 594. 
OJ L 189, 3.7.1998, p. 42. 
See  Article  2(1)  of  the  Law  on  BGK  in  conjunction  with  Article  1  of  the  Regulation  of  the  President  of  Poland  of 
30 May 1924 merging the State credit institutions into Bank Gospodarstwa Krajowego (Dziennik Ustaw (Dz. U.) of 1924 
No  46,  item 477).  See  also  Article  46(1)  of  the  Law  on  banking  of  13  April  1960  (Dz.  U.  of  1960  No  20,  item  121) 
together with Article 64(2) of the Law on banking of 12 June 1975 (Dz. U. of 1975 No 20, item 108) and Article 96(1)(1) 
of the Law on banking of 26 February 1982 (Dz. U. of 1982 No 7, item 56). See also Article 14(1) of the Law on banking 
of  29  August  1997  (consolidated  text:  Dz.  U.  of  2002  No  72,  item  665)  (hereinafter  the  ‘Law  on  banking’).  See 
Regulation  of  the  Minister  for  the  State  Treasury  of  11  May  2010  laying  down  the  articles  of  incorporation  for  Bank 
Gospodarstwa Krajowego (Dz. U. of 2010 No 81, item 535). 

 
 
 
 
                                                 
institution  created  for  public  purposes,  BGK  is  exempted  from  Directive  2006/48/EC  of 
14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast)4. 

1.2  According to the draft law’s explanatory memorandum5, one of the main aims of the draft law is to 

reduce the cost of borrowing by BGK on the financial markets. The draft law intends to improve 

BGK’s credit rating up to a level similar to the rating of Poland’s sovereign debt. This effect would 

be achieved by introducing an explicit provision on the liability of the State Treasury for BGK’s 
debts in case of BGK’s liquidation6. Moreover, the draft law also significantly relaxes the rules on 

transfers of funds between BGK and the State Treasury, by introducing (i) a general obligation for 

the Minister for public finance to provide BGK with own funds sufficient to carry out its statutory 
tasks7, and (ii) the possibility of reducing BGK’s statutory funds if they exceed the level necessary 

to  comply  with  supervisory  requirements  and,  consequently,  resulting  in  a  transfer  to  the  State 
budget8.  The  draft  law  aims  also  to  facilitate  the  refinancing  of  BGK’s  real  estate  activities, 

including in particular its support of government housing programmes, by creating a legal basis for 
issuance by BGK of mortgage-backed securities9. The draft law also streamlines and clarifies Law 

on BGK. 

1.3  As  a  result  of  the  draft  law,  BGK  will  also  become  the  provider  of  core  banking  services  to  the 
State  budget  and  State  budget  entities.  State  bank  accounts,  including  those  for  the  State  budget, 

State  budget  entities  and  tax  authorities,  are  currently  operated  by  NBP  which  maintains  a  legal 
monopoly  on  providing  core  banking  services  to  the  State  until  Poland’s  adoption  of  the  euro10. 
The draft law removes this limitation11, allowing the Minister for Finance to select either NBP or 

BGK as a provider of banking services. After the entry into force of the draft law, NBP would, if 
selected,  therefore  be  allowed12  -  but  no  longer  legally  required  -  to  fulfil  the  function  of  fiscal 

agent of the State. 

2. 

General observations  

In view of the envisaged strengthening of BGK’s market position resulting from the draft law expressly 

introducing State liability for BGK’s obligations, the ECB notes its previous observations on the need to 

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OJ L 177, 30.6.2006, p. 1. See Article 2. 
Not yet available on Sejm’s website.  
Article 1(2) of the draft law, amending Article 3(4) of the Law on BGK. 
Article 1(2) of the draft law, amending Article 3(3) of the Law on BGK. 
Article 1(7) of the draft law, inserting new Article 5c to the Law on BGK. 
Article 1(8) of the draft law, inserting new Article 6a to the Law on BGK. 
Resulting from Article 196(2) and (4) of the Law of 27 August 2009 on public finance (Dz. U. of 2009, No 157, item 
1240). 
Article 5 of the draft law, deleting Article 196(4) of the Law on public finance. 
Under  Article  196(2)  of  the  Law  on  public  finance  and  Article  51(1)(2)  of  the  Law  of  29  August  1997  on  Narodowy 
Bank Polski (consolidated text: Dz. U. of 2005, No 1, item 2).  

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maintain  a  level  playing  field  and  to  avoid  undue  distortions  of  competition  between  financial 
institutions13.  

3. 

Specific observations  

3.1.  The ECB understands that BGK may be a counterparty for NBP’s monetary policy operations, and 

that  mortgage-backed  securities  issued  by  BGK  may  become  eligible  as  collateral  for  the  NBP’s 
monetary  policy  operations14.  The  ECB  reminds  the  Polish  authorities  that  compliance  with  the 

monetary financing prohibition laid down in the Treaty needs to be ensured. In this respect, Article 

123(2)  of  the  Treaty  lays  down  that  publicly  owned  credit  institutions  shall  be  given  the  same 

treatment as private credit institutions insofar as participation in monetary policy operations of the 

central  banks  is  concerned,  whereas  the  prohibition  contained  in  Article  123(1)  of  the  Treaty 

against  purchases  in  the  primary  market  of  securities  issued  by  the  public  sector  applies  also  to 

publicly  owned  credit  institutions.  Therefore,  NBP  may  not  purchase  mortgage-backed  securities 
issued by BGK in the primary market15.  

3.2  Article 21.2 of the Statute of the European System of Central Banks and of the European Central 

Bank (ESCB Statute) expressly recognises the provision by the ECB or the national central banks 

of fiscal agency services to the public sector, as it is a legitimate function traditionally performed 
by central banks16. However, Article 21.2 of the ESCB Statute does not oblige the central banks to 

undertake any fiscal agency functions. In view hereof, the ECB takes note of the possibility for the 

Minister of Finance to select BGK instead of the NBP as provider of banking services to the State 
budget17. 

3.3 

In  view  of  the  envisaged  possibility  of  reducing  BGK’s  statutory  funds  and  transferring  the 
difference to the State budget18, the ECB understands that sufficient safeguards will be in place to 

ensure  that  such  a  transfer  would  not  compromise  BGK’s  compliance  with  banking  supervisory 

requirements.  

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

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18  

See  paragraph  2.2  of  ECB  Opinion  CON/2009/22.  All  ECB  opinions  are  available  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
As published and updated from time to time on NBP’s website www.nbp.pl. 
See also in part paragraph 3.2 of ECB Opinion CON/2009/68. 
See Chapter 2 of the ECB Convergence Report of May 2010.  
Article 5 of the draft law, deleting Article 196(4) of the Law of 27 August 2009 on public finance (Dz. U. of 2009, No 
157, item 1240).  
Article 5c of the Law on BGK, as amended by Article 1(7) of the draft law. 

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Done at Frankfurt am Main, 9 September 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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