Opinion of the European Central Bank of 28 May 2015 on the legal framework for the deposit guarantee scheme and resolution in the financial markets (CON/2015/17)
Date: 2015-05-28
Institutions: European Central Bank
Subjects: Poland, bank deposit, financial stability, guarantee, institutional activity, national law, public institution

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 28 May 2015  

on the legal framework for the deposit guarantee scheme and resolution in the financial markets 

(CON/2015/17) 

Introduction and legal basis 

On  10  April  2015  the  European  Central  Bank  (ECB)  received  a  request  from  the  Polish  Ministry  of 

Finance for an opinion on a draft law on the Bank Guarantee Fund, the deposit guarantee scheme and 

compulsory restructuring (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  and  the  third  and  sixth  indents  of  Article 2(1)  of  Council  Decision 
98/415/EC1,  as  the  draft  law  relates  to  Narodowy  Bank  Polski  (‘NBP’)  and  rules  applicable  to  financial 

institutions  insofar  as  they  materially  influence  the  stability  of  financial  institutions  and  markets.  For 

elements  of  the  draft  law,  where  the  exclusive  purpose  is  the  implementation  of  Union  law,  the  ECB’s 

competence  to  deliver  an  opinion  is  based  on  Article  25.1  of  the  Statute  of  the  European  System  of 

Central Banks and of the European Central Bank. 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 main purpose of the draft law is to modify the legal framework of the current deposit guarantee 

scheme in Poland, operated by  the  Bank Guarantee  Fund (the ‘Fund’), and develop a framework 

allowing for the resolution of entities subject to this scheme. To this end, the draft law implements 
Directive 2014/59/EU of the European Parliament and of the Council2 and Directive 2014/49/EU of 
the  European  Parliament  and  of  the  Council 3  through  a  new,  separate  legal  act  repealing  the 
current  Law  on  the  Bank  Guarantee  Fund4  (hereinafter  the  ‘Law  on  BFG’).  The  draft  law  also 

repeals  existing  restructuring  and  support  measures  under  Polish  law  to  bring  the  relevant 

provisions in line with the new resolution framework. In this respect the draft law amends several 

other related legal acts, including  legislation on financial instruments, insolvency, financial market 

supervision and recapitalisation of financial institutions. 

1  

2  

3  

4  

Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

Directive 2014/59/EU of the European Parliament and the Council of 15 May 2014 establishing a framework for the 
recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and 
Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and 
2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the  European  Parliament  and  of  the 
Council (OJ L 173, 12.6.2014, p. 190). 
Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes 
(OJ L 173, 12.6.2014, p. 149). 

Consolidated text Dz.U. of 2014, item 1866. 

 
 
 
 
                                                 
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1.2  Under  the  draft  law,  the  Fund,  which  is  a  legal  person,  is  designated  as  the  national  resolution 

authority and administrator of the deposit guarantee scheme, and Komisja Nadzoru Finansowego 

(KNF, The Financial Supervisory Authority) retains its supervisory tasks as the national supervisory 

authority. The most important characteristics of the redesigned framework are the following: 

(a) 

the newly established deposit guarantee scheme and resolution framework is obligatory and 

covers,  inter  alia,  domestic  banks,  branches  of  non-EU  credit  institutions  and  Polish  credit 

unions; 

(b) 

the  purpose  of  the  Fund’s  activities  is  to  take  measures  aimed  at  stabilising  the  domestic 

financial  system,  in  particular  by  ensuring  the  functioning  of  the  compulsory  deposit 

guarantee scheme and conducting compulsory restructuring proceedings; 

(c) 

as the resolution authority, the Fund is conferred with resolution powers and has access to 

resolution  tools,  in  particular  the  sale  of  business  tool,  the  bridge  institution  tool,  the  asset 

separation tool and the bail-in tool; 

(d)  when performing its tasks, the Fund cooperates with other bodies and institutions concerned 

with the stability of the domestic financial system, as well as other competent authorities; 

(e) 

the  governing  bodies  of  the  Fund  are  the  Fund  Council  and  the  Fund  Management  Board. 

The  Fund  Council  consists  of  the  chairperson  and  seven  members,  including  two 

representatives  of  NBP,  nominated  by  its  President.  The  Fund  Management  Board  is 

composed of three to five members (including the President and the Vice-President) and is 

appointed by the Fund Council; and 

(f) 

the  main  sources  of  the  Fund’s  financing  include  mandatory  ex-ante  annual  contributions, 

extraordinary  ex-post  contributions,  income  from  financial  assets  of  the  Fund,  funds  from 

short-term loans granted by NBP, funds from loans granted from the State budget, and funds 

received as a result of borrowing and issuing bonds. 

1.3  Under  Article  251(7)  of  the  draft  law,  the  sources  of  the  Fund’s  financing  include  funds  from  the 

short-term  loans  granted  by  NBP  in  accordance  with  Article  273.  According  to  this  Article,  in  the 

event of a threat to financial stability and in order to cover any urgent needs of the Fund related to 

the disbursement of guaranteed funds, NBP may, at the request of the Fund Council, and subject 

to the provision of adequate collateral, grant short-term credit to the Fund. The ECB understands 

that the circumstances and conditions under which such credit will be granted are similar to those 
governing  short-term  credit  under  the  current  Law  on  BFG..The  ECB  also  understands  that,  if 

approved by NBP at its sole discretion, such temporary credit would be provided under a contract 

between  NBP  as  creditor,  and  the  Fund  as  debtor.  The  draft  law  does  not  stipulate  further  the 

material terms and conditions (e.g. pricing terms) of such credit. 

1.4  The Fund is designated as a resolution authority and, as a result, the role of NBP in administrative 

resolution matters is mainly consultative and cooperative. This role includes:  

(a) 

consultative  powers,  including  the  requirement  imposed  on  the  Minister  for  Finance  to 

consult  the  NBP  President  on  certain  implementing  measures  as  well  as  on  a  decision  to 

provide a recapitalisation guarantee in respect of a distressed financial institution or to apply 

any of the government financial stabilisation tools;  

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(b) 

an  obligation  to  conclude  separate  agreements  for  the  cooperation  and  the  exchange  of 

information  between  NBP,  the  Fund,  KNF  and  the  Minister  for  Finance,  which  would 

establish  an  obligation  to  exchange  information  necessary  for  the  performance  of  the 

statutory tasks of the respective entities; and 

(c) 

involvement in resolution proceedings, where NBP: (i) is informed by KNF of any cases that 

have  been  identified  of  institutions  that  are  likely  to  fail,  and  (ii)  informs  the  Fund  of  any 

institutions  it  is  aware  of  whose  economic  situation  may  have  a  negative  impact  on  the 

continuation of critical functions, financial stability or the protection of depositors. 

2. 

General observations  

2.1  The  ECB  welcomes  the  draft  law  which  strengthens  the  tools  and  procedures  available  to  the 

national authorities, thereby allowing for early intervention and, if necessary, effective resolution of 

institutions,  in  line  with  the  common  framework  of  intervention  powers  and  rules  laid  down  in 

Directive 2014/59/EU . The resolution tools and procedures will, in particular, help to resolve failing 

banks  while  preserving  financial  stability,  and  help  shield  the  public  budget  from  the  resolution 

costs.  

2.2  The ECB stresses, however, that it does not opine on whether the draft law effectively discharges 

the obligations of Poland to implement Directive 2014/59/EU and Directive 2014/49/EU into Polish 

law. Rather, the ECB focuses on those provisions that may impact on the role and tasks of NBP as 

a central bank and as a member of the European System of Central Banks (ESCB). 

3. 

The Fund as the resolution authority 

3.1  Directive  2014/59/EU  does  not  prescribe  the  type  of  authority  or  authorities  that  Member  States 

should  appoint  as  resolution  authorities,  leaving  this  to  the  discretion  of  Member  States.  In  this 

respect,  the  ECB  notes  that  the  Fund  is  designated  as  the  national  resolution  authority  and 

administrator of the deposit guarantee scheme as well as administrator of the resolution financing 

arrangement. 

3.2  The  ECB  understands  that  the  Fund  is  therefore  entrusted  with  different  functions,  in  particular: 

(i) management  of  the  deposit  guarantee  scheme;  (ii)  management  of  the  resolution  fund;  and 

(iii) resolution  functions.  In  this  respect,  the  ECB  observes  that,  under  Directive  2014/59/EU, 

adequate structural arrangements must be in place to ensure operational independence and avoid 

conflicts  of  interest  between  the  resolution  function  and  the  other  functions  of  the  relevant 
authority5. 

4. 

Liquidity provision from NBP to the Fund 

4.1  The  ECB  emphasises  the  importance  of  alignment  of  national  provisions  with  the  monetary 

financing  prohibition  under  Article  123  of  the  Treaty.  The  ECB  underlines  that  national  legislation 

which  provides  for  the  financing  by  a  national  central  bank  (NCB)  within  the  ESCB  of  a  national 

5  

See Article 3(3) of the Directive 2014/59/EU. 

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deposit guarantee scheme for credit institutions will only be compatible with the monetary financing 

prohibition if such financing is short-term, addresses urgent situations, systemic stability issues are 
at  stake  and  decisions  are  made  at  the  NCB’s  discretion 6.  To  this  end,  inserting  references  to 

Article 123 of the Treaty in national legislation should be considered. When exercising its discretion 

to  grant  a  loan,  the  NCB  must  ensure  that  it  is  not  in  effect  taking  over  a  government  task.  In 

particular, central bank support for deposit guarantee schemes should not amount to a systematic 

‘pre-funding’ operation. 

4.2  The ECB notes that short-term credit granted by NBP to the Fund under Article 273 of the draft law 

is not explicitly excluded from being used to replenish the resolution fund, even though Article 273 

provides that NBP may only grant such short-term credit in order to cover urgent needs of the Fund 

related to the disbursement of guaranteed funds. The provision of such financing to the resolution 

fund would constitute a government task, and any such loan or financing by NBP would therefore 

breach the monetary financing prohibition under the Treaty. For the sake of legal certainty, the ECB 

therefore  recommends  that  an  explicit  provision  be  inserted  into  the  draft  law  specifying  that  the 

short-term  credit  granted  under  Article  273  may  not  be  used  to  supplement  the  bank  resolution 

fund, the credit unions’ resolution fund or for any other resolution purposes. Directive 2014/59/EU 

provides  that  resolution  costs  should  in  principle  be  borne  by  shareholders  and  creditors  and, 

where these funds are not sufficient, by financing arrangements. In line with the monetary financing 
prohibition, NCBs may not fund these financing arrangements7 and replenish the resolution fund by 

providing credit to it.  

5. 

Cooperation and exchange of information between the Fund and other relevant authorities, 

including NBP 

5.1  The  ECB  notes  that  the  draft  law  provides  for  cooperation  between  the  Fund  (as  the  resolution 

authority and the deposit guarantee scheme administrator) and other relevant authorities, including 

NBP, in performing their respective tasks, each keeping in mind the impact of their performance on 

the  other.  In  particular,  this  is  reflected  in  Section  V  of  the  draft  law  referring  to  the  information 

requirements, data exchange and protection. 

5.2  The  ECB  welcomes  these  provisions  as  they  will  enable  the  relevant  entities  to  perform  their 

statutory tasks in a coordinated fashion. In particular, they facilitate the performance by NBP of its 

financial  stability  mandate.  Such  arrangements  are  also  in  line  with  current  ECB  doctrine  and 

requirements  under  Directive  2014/59/EU,  pursuant  to  which  Member  States  must  ensure  that, 

where  the  central  bank  is  not  itself  the  resolution  authority,  the  competent  authority  (i.e.  the 

authority  responsible  for  the  prudential  supervision  of  institutions)  and  the  resolution  authority 
engage in an adequate exchange of information with the NCB8. 

6  
7  

8  

See the ECB’s June 2014 Convergence Report, p. 30. 
See  paragraph  3.4  of  ECB  Opinion  CON/2012/99,  paragraph  4  of  ECB  Opinion  CON/2011/103,  paragraph 4.3  of 
ECB  Opinion  CON/2011/93,  paragraph  3.6  of  ECB  Opinion  CON/2011/39  and  paragraph  3.2  of  ECB  Opinion 
CON/2008/59.  All  ECB  Opinions  are  available  on  the  ECB’s  website  at  www.ecb.europa.eu.  See  the  ECB’s 
June 2014 Convergence Report, p. 28.  

See paragraph 3.1 of ECB Opinion CON/2012/99. 

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6.  

Extending the resolution regime to credit unions 

6.1  Under  the  draft  law,  Polish  credit  unions  will  be  subject  to  both  the  regular  deposit  guarantee 

scheme and the resolution scheme. To that end, the draft law creates separate sub-funds, i.e. the 

credit  unions’  guarantee  fund  and  the  credit  unions’  resolution  fund,  and  includes  specific 

provisions related to the resolution of credit unions and safeguarding their depositors. 

6.2  The  ECB  was  consulted  on  the  existing  Law  on  credit  unions  several  times9.  In  its  opinions,  the 

ECB  especially  recommended  the  inclusion  of  credit  unions  in  NBP’s  minimum  reserves  regime 
and within the scope of KNF’s financial supervision10. The ECB notes that these elements are now 

part  of  the  credit  unions’  regulatory  framework,  together  with  the  inclusion  of  credit  unions  in  the 

current deposit guarantee scheme. 

6.3  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  increasing 

importance in the Polish banking sector. In view of the above, the ECB welcomes the extension of 

the  resolution  regime  to  credit  unions,  as  a  natural  consequence  of  their  being  subject  to  KNF 

supervision and the deposit guarantee scheme.  

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

Done at Frankfurt am Main, 28 May 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI 

9 

10 

See ECB Opinions CON/2009/60 and CON/2013/5.  

See paragraphs 2.5 and 2.7 of ECB Opinion CON/2009/60. See also paragraph 2.1 of ECB Opinion CON/2013/5.  

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