Opinion of the European Central Bank of 14 January 2013 on credit unions (CON/2013/5)
Date: 2013-01-14
Institutions: European Central Bank
Subjects: Poland, bank deposit, credit union, financial stability, financial supervision, foreign-exchange reserves, guarantee, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 14 January 2013 

on credit unions 

(CON/2013/5) 

Introduction and legal basis 

On 6 November 2012, the European Central Bank (ECB) received a request from the Polish Parliament 

for an opinion on a draft law amending the Law on credit unions and certain other laws (hereinafter the 

‘draft  law’).  On  6  December  2012,  the  ECB  was  reconsulted  on  a  revised  version  of  the  draft  law 

produced by the Parliament. This opinion considers the revised version of 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  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  provisions1,  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 

The  draft  law  amends  the  Law  of  5  November  2009  on  credit  unions2  (hereinafter  the  ‘Law  on  credit 

unions’), which currently regulates the operation of credit unions active in Poland, and certain other laws, 

with a view to stabilising the credit unions system in the following areas: 

1.1  Deposit  guarantees.  The  draft  law  establishes  an  obligatory  deposit  guarantee  scheme  covering 

deposits  received  by  credit  unions,  formed  as  a  sub-fund  under  the  management  of  the  Bank 

Guarantee  Fund  (Bankowy  Fundusz  Gwarancyjny,  BFG),  which  operates  the  existing  deposit 

guarantee scheme for banks (hereinafter the ‘credit unions sub-fund’). The credit unions sub-fund 

would  be  financed  from  mandatory  annual  contributions  made  by  credit  unions,  with  possible 

reliance on other sources of financing if the payout of guaranteed deposits is necessary, that are to 

be  used  in  a  pre-defined  order  and  include  a  stabilisation  fund  for  credit  unions  operated  by  the 

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2 

OJ L 189, 3.7.1998, p. 42. 
Dziennik Ustaw (Dz. U.) of 2012, item 855. 

 
 
 
 
                                                 
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National Credit Union, a statutory central association of individual credit unions3. To this end, the 
draft law inserts a new Chapter 4c in the Law of 14 December 1994 on the Bank Guarantee Fund4 

(hereinafter  the  ‘Law  on  the  BFG’).  Chapter  4c  mirrors,  with  necessary  modifications,  the  rules 

applicable to the existing deposit guarantee scheme for banks as regards,  inter alia, the coverage 

level and the payout procedures. 

1.2   Supervisory  framework.  Supervisory  powers  exercised  by  the  Financial  Supervision  Authority 

(Komisja Nadzoru Finansowego, KNF) over credit unions are enhanced by, inter alia, granting the 

KNF new supervisory tools and clarifying the scope of information to be provided by credit unions 

to the KNF. 

1.3  Liquidity  of  credit  unions.  The  draft  law  regulates  more  comprehensively  the  credit  unions’ 

obligation  to  maintain  a  ‘liquid  reserve’.  The  liquid  reserve  aims  to  preserve  the  credit  unions’ 

liquidity and is to be held by individual credit unions on separate accounts with the National Credit 

Union.  Funds  from  the  liquid  reserve  may  be  drawn  on  by  the  National  Credit  Union  to  grant 

‘liquidity loans’ to individual credit unions facing liquidity problems. At the same time, the draft 

law and the Law on credit unions provide for several forms of collateralised central bank liquidity 

assistance  to  be  provided  by  NBP:  (a)  to  the  stabilisation  fund;  (b)  as  direct  loans  to  individual 

credit  unions,  also  against  collateral  in  the  form  of  State  guarantee;  and  (c)  to  the  BFG  for  the 
operation of the credit unions sub-fund5. 

1.4  Restructuring,  reorganisation  and  insolvency.  The  draft  law  modifies  the  framework  for  the 

restructuring,  reorganisation,  winding  up  and insolvency  of  credit  unions. The following  specific 

amendments are introduced:  

(a) 

In the Law of 28 February 2003 on bankruptcy and rehabilitation6, the existing insolvency 

regime for banks is extended to also cover credit unions. 

(b)  

In  the  Law  on  credit  unions,  a  number  of  restructuring  instruments  are  introduced,  to  be 

implemented  under  the  KNF’s  supervision,  with  a  view  to  more  easily  dividing,  merging, 

taking  over  or  liquidating  individual  credit  unions,  including  with  the  use  of  financial 

assistance granted from the stabilisation fund. 

(c) 

In the Law on the BFG, the BFG is entrusted with new tasks related to restructuring of credit 

unions, such as granting loans and guarantees to credit unions threatened by insolvency and 

acquiring  claims  of  credit  unions.  This  financial  support  is  to  be  financed  from  the  credit 

unions sub-fund.  

3 

4 
5 
6 

The  existing  stabilisation  fund,  operated  by  the  National  Credit  Union,  is  designed  to  provide  financial  assistance  to 
credit unions in financial difficulties. It is financed from annual contributions of individual credit unions, separate from 
annual  contributions  to the  credit  unions  sub-fund.  Under  the  proposed  Article  38r(2)  of  the  Law  on  the  BFG  and  the 
proposed Article 55(1a) of the Law on credit unions, the resources of the stabilisation fund are transferred, if necessary, 
by the National Credit Union to the credit unions sub-fund and used for the payout of guaranteed deposits.  
Consolidated text published in Dz. U. of 2009 No 8, item 711. 
See paragraphs 3.1 to 3.4 of this opinion. 
Consolidated text published in Dz. U. of 2012, item 1112. 

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1.5 

Information  sharing  arrangements.  The  existing  information  sharing  arrangements  between  the 

KNF, NBP and the BFG are extended to also cover information relating to credit unions. 

2.   General observations 

2.1  The  ECB  was  consulted  on  the  existing  Law  on  credit  unions  in  2009,  when  this  law  was  at  an 
early drafting stage7. In its opinion, the ECB especially recommended the inclusion of credit unions 
in NBP’s minimum reserves regime and in the scope of the KNF’s financial supervision8. The ECB 

notes  that  these  elements  are  now  part  of  the  credit  unions’  regulatory  framework.  In  particular, 

credit  unions  will  be  expected  to  hold  minimum  reserves  with  NBP  through  a  central  account 

maintained by NBP for the National Credit Union, from 18 months after the publishing of the Law 

on  credit  unions,  i.e.  from  27  January  2014.  The  ECB  understands  that  the  draft  law  aims  to 

complement the existing legal provisions in order to establish a comprehensive legal framework for 

credit unions in view of their rising importance in the Polish banking sector. This is to be done, in 

particular,  by  introducing  more  robust  supervisory  instruments,  liquidity  safeguards  and 

restructuring tools. In this opinion, the ECB addresses the elements introduced by the draft law, as 

well as other relevant aspects of the Law on credit unions that have changed compared to the draft 

law opined on by the ECB in 2009. 

2.2  Shortly before the ECB was consulted on the draft law, another amendment to the Law on credit 
unions  was  adopted  (hereinafter  the  ‘2012  amendment’)9.  The  ECB  understands  that  the  2012 

amendment did not include any independent substantive provisions which would warrant an ECB 

opinion,  and  that  its  sole  aim  was  to  introduce  in  the  Law  on  credit  unions  certain  technical 

amendments  required  from  a  legislative  perspective  to  reflect  the  impact  on  several  of  its 
provisions of the long time span between adoption and entry into force10. 

3.  

Specific observations 

Liquidity support from NBP to the National Credit Union  

3.1  Pursuant to the draft law, in the event of a threat to the liquidity of credit unions and where there is 

a risk that funds held in the stabilisation fund may be exhausted, NBP may grant, against adequate 

collateral, a loan to the National Credit Union with a view to increasing the stabilisation fund. The 

7 
8 
9 
10 

See Opinion CON/2009/60. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu.  
See paragraphs 2.5 and 2.7 of Opinion CON/2009/60.  
See the Law of 10 October 2012 amending the Law on credit unions (Dz. U. of 2012, item 1166). 
The Law on credit unions was adopted on 5 November 2009. On 30 November 2009, the Polish President requested the 
Constitutional Court to review the Law’s compliance with the Constitution and on 12 January 2012 the Court passed its 
judgement  (ref.  Kp  10/09).  The  Law  on  credit  unions  then  had  to  be  adapted:  (a)  to  incorporate  the  Court’s  findings, 
which was achieved by resolution of the Polish Parliament of 28 June 2012; and (b) to address certain temporal issues 
which do not result directly from the Court’s judgement, which was achieved by the 2012 amendment. Eventually, the 
Law on credit unions, as amended by the 2012 amendment, entered into force on 27 October 2012. 

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National Credit Union then provides financial support from the stabilisation fund to illiquid credit 

unions.  

3.1.1  The ECB has consistently stated in its convergence reports and its opinions that national legislation 

which provides for the financing by national central banks (NCBs) of credit institutions, other than 

in connection with central banking tasks, in particular to support insolvent credit or other financial 
institutions, is incompatible with the monetary financing prohibition11. The provision of liquidity in 

exceptional  circumstances  and  on  a  case-by-case  basis  to  temporarily  illiquid  but  solvent  credit 
institutions constitutes an inherent central bank task12. Solvency support to credit or other financial 

institutions is a State task however, and may not be assumed by an NCB. 

3.1.2  Therefore,  it  should  be  ensured  that  liquidity  support  provided  by  NBP  to  the  National  Credit 

Union with a view to increasing its stabilisation fund is temporary in nature and may not be used to 
provide  financial  support  to  insolvent  credit  unions13.  The  ECB  reiterates  its  recommendation  to 

introduce  into  Polish  law  express  safeguards  in  this  respect,  which  should  be  applicable  to  all 
financial institutions receiving NBP’s liquidity support14.  

3.1.3  Following the entry into force of the draft law, two parallel legal bases will exist for the granting of 

financial  assistance  by  NBP  to  replenish  the  resources  of  the  stabilisation  fund:  the  existing, 

transitional Article 91(3) of the Law on credit unions and Article 43(2) of the Law of 29 August 
1997 on Narodowy Bank  Polski15, as amended by the draft law. They lay down similar but non-

identical  criteria  for  granting  assistance.  The  ECB  recommends  that  the  rules  for  granting  NBP 

support  to  the  stabilisation  fund  are  clarified  by  defining  the  relationship  between  these  two 

provisions or by deleting the transitional provision in Article 91(3) of the Law on credit unions. 

Liquidity support from NBP to individual credit unions 

3.2  Pursuant to Article 8(1) of the draft law, within the period of six months following the entry into 

force of the draft law, if there is a threat to an individual credit union’s liquidity, NBP may grant 

credit to it to replenish its financial resources.  

3.2.1  Pursuant  to  Article  8(2)  of  the  draft  law,  such  credit  may  be  granted  against  the  State  guarantee 

provided  for  under  the  Law  of  12  February  2009  on  State  support  to  financial  institutions 
(hereinafter  the  ‘Law  on  State  support’)16.  The  following  criteria  need  to  be  satisfied  to  comply 

with the monetary financing prohibition where a State guarantee is used as collateral accepted by 

NBP for liquidity granted to individual credit unions: (a) it must be ensured that the credit provided 

11  

12  
13 

14  
15  
16 

See  the  ECB’s  Convergence  Report  2012,  p.  29.  The  monetary  financing  prohibition  in  Article  123  of  the  Treaty  is 
further clarified in Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application 
of prohibitions in Article 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 
See Opinion CON/2008/58, paragraph 4.1. 
e.g.  by  the  granting  of  loans  for  the  purposes  of  implementing  rehabilitation  proceedings  pursuant  to  the  proposed 
Article 38(6) and (8) of the Law on credit unions. 
See the ECB’s Convergence Report 2012, p. 251, paragraph 6.6.4.  
Consolidated text published in Dz. U. of 2005 No 1, item 2. 
Dz. U. of 2009 No 39, item 308. 

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by NBP is as short term as possible; (b) there must be systemic stability aspects at stake; (c) there 

must be no doubt as to the legal validity and enforceability of the State guarantee under Polish law; 

and (d) there must be no doubt as to the economic adequacy of the State guarantee, which should 

cover both principal and interest on the loans, thus fully preserving the financial independence of 
NBP17. The ECB notes, in particular, that the economic adequacy criterion is not currently met, as 

Article 4(2) of the Law on State support only provides for State guarantees covering up to 50% of 

the outstanding credit amount. In addition the short-term nature criterion is also not currently met 

as Article 8 of the draft law may be interpreted as allowing longer-term credit, provided that it is 

granted within the period of six months following the entry into force of the draft law. The ECB 

recommends that the draft law is amended to ensure compliance with these two criteria. 

3.2.2  Pursuant to Article 8(3) of the draft law, a limitation under which funds obtained by a credit union 

may only be used to remove the risk of insolvency does not apply to NBP credit obtained under 

Article 8(1) of the draft law. As the current formulation of this exemption may lead to diverging 

interpretations,  the  ECB  recommends  that  the  draft  law  expressly  clarifies  that  financial  support 

under Article 8(1) of the draft law cannot be used as a means of recapitalisation of insolvent credit 

unions. 

Liquidity support from NBP to the BFG for the operation of the credit unions sub-fund 

3.3  Pursuant  to  the  draft  law,  collateralised  credit  may  also  be  granted  by  NBP  to  the  BFG  for  the 

operation of the credit unions sub-fund i.e. to support the payout of guaranteed deposits received by 

credit unions, where other sources of financing are exhausted and a threat to financial stability has 

arisen.  The  ECB  understands  that  such  credit  may  only  be  used  in  connection  with  the  deposit 

guarantee function of the credit unions sub-fund, and not in connection with its solvency support 
function18. The ECB notes that: (a) such credit is equivalent to a similar liquidity support measure 

available from NBP to the BFG for the operation of the deposit guarantee scheme for banks; and 

(b)  the  criteria  for  granting  both  of  these  liquidity  support  measures  by  NBP  are  defined  in  a 

uniform manner in the Law on BFG and in the draft law. In this regard, reference is made to the 

ECB’s previous assessment, which confirmed the compatibility of those criteria with the monetary 
financing prohibition19.  

Information sharing 

3.4  The  proposed  Article  80za  of  the  Law  on  credit  unions  provides,  inter  alia,  for  the  exchange  of 

information  on  credit  unions  between  NBP,  the  KNF  and  the BFG.  The  ECB  welcomes  these 

provisions as they will enable the said entities to perform their statutory tasks with regard to credit 

unions, and facilitate the performance by NBP of its financial stability mandate.  

17  
18  
19 

See, for example, Opinion CON/2012/4, paragraph 5. 
See Opinion CON/2012/58, paragraph 3.1. 
See  Opinion  CON/2012/58,  paragraph  3.3,  where  it  was  confirmed  that  NBP’s  financing  of  the  BFG,  as  regards  the 
operation of the deposit guarantee scheme for banks under the present Polish law, meets the requirements of being short-
term, addressing urgent situations where systemic stability aspects are at stake and of being at the NCB’s discretion (see 
the ECB’s Convergence Report 2012, p. 30). 

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3.5  Legislative consistency  

In the interests of legislative consistency, the proposed Chapter 3a of the Law on the BFG needs to 

be  reconciled  with  parallel  amendments  to  that  Law  proposed  by  another  recent  legislative 

initiative  establishing  a  stabilisation  fund  for  credit  institutions  on  which  the  ECB  produced  a 
separate opinion20. 

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

Done at Frankfurt am Main, 14 January 2013. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO 

20 

See  the  Chapter  3a  proposed  in  the  draft  law  amending  the  Law  on  the  Bank  Guarantee  Fund  and  certain  other  laws, 
discussed in Opinion CON/2012/91. 

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