Opinion of the European Central Bank of 15 November 2010 on building societies (CON/2010/81)
Date: 2010-11-15
Institutions: European Central Bank
Subjects: Poland, financial stability, foreign-exchange reserves, mortgage bank, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 15 November 2010 

on building societies 

(CON/2010/81) 

Introduction and legal basis 

On 11 October 2010 the European Central Bank (ECB) received a request from the Polish Parliament for 

an opinion on a draft law on building societies and State support for home savings schemes (hereinafter 

‘the draft law’).  

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, the sixth indent of Article 2(1) and Article 2(2) of Council Decision 

98/415/EC  of  29 June 1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities 
regarding  draft  legislative  provisions1,  as  the  draft  law  relates  to  the  rules  applicable  to  financial 

institutions insofar as they materially influence the stability of financial institutions and markets, as well 

as to instruments of monetary policy of Member States other than Member States whose currency is the 

euro.  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 

The  draft  law  provides  for  a  legal  framework  for  the  operation  of  building  societies  (kasy 
oszczędnościowo-budowlane), classifying them as a sub-category of credit institutions (banks2), operating 
in  the  form  of  joint-stock  companies3.  The  business  of  building  societies  will  exclusively  comprise 

receiving deposits from natural persons and granting mortgages to such persons with the aim of financing 
housing-related investments specifically enumerated in the draft law4. The draft law is an attempt to re-

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OJ L 189, 3.7.1998, p. 42. 
Credit  institutions  registered  in  Poland  are  legally  referred  to  as  ‘banks’  (this  legal  term  does  not  cover  credit  unions) 
because the term ‘credit institutions’, under Polish law, only relates to European Economic Area (EEA) credit institutions 
from  outside  Poland.  Non-EEA  credit  institutions  are  referred  to  under  Polish  law  as  ‘foreign  banks’  (Article  2, 
Article 4(3) and Article 4(1)(17) to (20) of the Law on banking of 29 August 1997 (consolidated text: Dziennik Ustaw 
(Dz. U.) of 12 June 2002 No 72, Item 665, hereinafter, the ‘Law on banking’)). 
Article 2 of the draft law.  
Articles 4 and 8 of the draft law. 

 
 
 
 
                                                 
establish the system of building societies which had been first introduced in the legal provisions in 19975, 

but never realised in practice. 

2. 

ECB comments 

2.1  Obligation to maintain minimum reserves with the central bank 

2.1.1  The draft law proposes an arrangement under which building societies are to be excluded from the 

obligation to hold minimum reserves with Narodowy Bank Polski (NBP).  

2.1.2  In  past  opinions6,  the  ECB  has  maintained  that  the  Eurosystem’s  minimum  reserves  obligations 

apply to entities that fulfil the functional criteria of a ‘credit institution’ according to the definition 
contained  in  the  Eurosystem’s  minimum  reserves  rules7,  which  cross-refers  to  criteria  defined  in 
Article  4(1)(a)  of  Directive  2006/48/EC8.  Such  criteria  define  credit  institutions  as  undertakings 

whose business is: (i) to receive deposits or other repayable funds from the public; and (ii) to grant 

credit for their own account. The ECB notes that building societies will fulfil both of the functional 

criteria of a ‘credit institution’, namely that they will: (i) receive deposits from natural persons, i.e. 

deposits ‘from the public’ within the meaning of the Directive 2006/48/EC; and (ii) grant credit for 
their  own  account9.  Consequently,  in  line  with  its  previous  opinions10,  the  ECB  considers  that 

building societies will be subject to the Eurosystem’s minimum reserves requirements when Poland 
adopts the euro11. Such requirements, and the sanctions related to them12, will apply directly by the 

operation of the Union law. 

2.1.3  As  regards  the  period  before  the  adoption  of  the  euro  by  Poland,  the  ECB  would  welcome  the 

inclusion  of  building  societies  in  NBP’s  minimum  reserves  regime  as  a  measure  facilitating  the 

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See the Law of 5 June 1997 on building societies and State support for home savings schemes (Dz. U. of 28 July 1997, 
No 85, Item 538), repealed on 1 January 2002. 
See  ECB  Opinions  on  national  legislation  on  credit  unions,  in  particular  paragraphs  10  to  14  of  ECB  Opinion 
CON/2005/8,  paragraph  3.1  of  ECB  Opinion  CON/2006/4),  paragraphs  10  to  17  of  ECB  Opinion  CON/2006/11  and 
paragraph  2.1  to  2.5  of  ECB  Opinion  CON/2009/60.  All  ECB  opinions  are  available  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
See Article 2(1) of Regulation ECB/2003/9 of 12 September 2003 on the application of minimum reserves (OJ L 250, 
2.10.2003, p. 10). 
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).  
Article 4 of the draft law. See also paragraph 2 of the Opinion of the European Monetary Institute CON/94/12. 
See paragraph 14 of ECB Opinion CON/2005/8, paragraphs 10 and 17 of ECB Opinion CON/2006/11 and paragraph 2.3 
of ECB Opinion CON/2009/60.  
Further in this context, it should also be noted that being subject to the Eurosystem minimum reserves regime is one of 
the  general  criteria  for  eligibility  to  participate  in  Eurosystem  monetary  policy  operations;  the  other  general  eligibility 
criteria include: (i) being financially sound and, in principle, being subject to at least one form of harmonised EU/EEA 
supervision by national authorities; and (ii) fulfilment of any operational criteria specified in the relevant contractual or 
regulatory  arrangements  applied  by  the  respective  national  central  bank  (see  Section  2.1  of  Annex  I  to  Guideline 
ECB/2000/7  of  31 August 2000  on  monetary  policy  instruments  and  procedures  of  the  Eurosystem,  OJ  L  310, 
11.12.2000, p. 1). 
See  Article  7  of  Council  Regulation  (EC)  No  2531/98  of  23  November  1998  concerning  the  application  of  minimum 
reserves by the European Central Bank (OJ L 318, 27.11.1998, p. 1) and Regulation ECB/1999/4 of 23 September 1999 
on the powers of the European Central Bank to impose sanctions (OJ L 264, 12.10.1999, p. 21). 

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harmonisation  of  Polish  law  with  the  Eurosystem  requirements13.  Moreover,  since  building 

societies  are  defined  by  the  draft  law  as  a  sub-category  of  banks,  they  will  be  eligible  to  access 
central  bank  liquidity,  i.e.  refinancing  credit  from  NBP14,  in  accordance  with  the  same  rules  as 

those applying to regular banks. This extension to building societies of the central bank’s liquidity 

providing  operations  should  be  accompanied  by  the  application  of  the  minimum  reserves 

obligations,  which  constitute  a  complementary  monetary  policy  instrument,  structurally  linked  to 
liquidity providing operations15. 

2.2  Calculation of contributions to the deposit-guarantee scheme 

The draft law sets the maximum level of contributions to be paid by the building societies to the 

Polish  deposit-guarantee  scheme  (Bank  Guarantee  Fund,  the  ‘Fund’)  at  0.1%  of  the  building 
societies’  risk-weighted  balance  sheet  assets  and  guarantees  and  endorsements16.  First,  the  ECB 

notes  that  the  draft  law  may need  to  be  updated  to refer  to  the  method  for  calculating  maximum 
contributions  to  the  Fund  specified  in  the  currently  binding  provisions17.  Second,  the  ECB 

understands  that  the  intended  effect  of  Article 18  of  the  draft  law  is  to  impose  on  the  building 

societies  a  level  of  contributions  to  the  Fund  lower  than  that  applicable  to  regular  banks.  In  this 

context, the ECB draws the Polish authorities’ attention to an advanced proposal by the European 
Parliament  and  Council  to  recast  Directive  94/19/EC  on  Deposit  Guarantee  Schemes18.  The 

amendments  introduced  in  the  proposed  recast  Directive  aim,  inter  alia,  at  harmonising  the 

calculation  of  contributions  paid  by  all  types  of  credit  institutions  to  the  deposit  guarantee 
schemes19.  The  ECB  recommends  that  the  Polish  authorities  take  due  account  of  this  ongoing 

legislative process when defining the building societies’ contributions to the Fund. 

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

Done at Frankfurt am Main, 15 November 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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See paragraph 3.1 of ECB Opinion CON/2006/4 and paragraph 2.4 of ECB Opinion CON/2009/60. Compare paragraph 
2.1 of ECB Opinion CON/2007/28.  
Article 42 of the Law of 29 August 1997 on  Narodowy Bank Polski (consolidated text: Dz. U. of 1 April 2005 No 1, 
Item 2). 
See paragraph 2.4 of ECB Opinion CON/2009/60. 
Article 18 of the draft law.  
Under  the  rules  currently  in  force,  the  amount  of  contributions  is  set  as  a  percentage  of  the  base  amount  defined  by 
reference  to  applicable  capital  requirements,  the  maximum  contribution  being  0.3%  of  such  base  amount  (see  Article 
13(1) to (1a) of the Law on the Bank Guarantee Fund, consolidated text Dz. U. of 4 June 2009 No 84 Item 711). 
See ‘Proposal for a Directive …/ …/ EU of the European Parliament and of the Council on Deposit Guarantee Schemes 
[recast] of 12 July 2010 (COM/2010/0368 final - COD 2010/0207, published on the European Commission’s website at 
www.ec.europa.eu, hereinafter the ‘proposed recast Directive 94/19/EC’).  
See Article 11 of the proposed recast Directive 94/9/EC.  

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