Characteristics

The core mission of cooperative banks is to act for the benefit of its members, clients and development of the local community by provision of banking products and services.

A special feature distinguishing cooperative banks from other financial institutions of a commercial nature is their local nature, as well as equal status of their owners resulting from the cooperative principle “one shareholder = one vote”, regardless of the number of shares held. Cooperative banks, unlike banks in the form of joint-stock companies, do not seek to maximize profits, but to optimize them in order to achieve their overarching goal, which is to act for the benefit of their members.

The top-level body of the cooperative bank is the General Meeting or the Meeting of Representatives, in which members or representatives of the cooperative bank, as well as proxies of the members or representatives, participate in person. In addition to the General Meeting or Meeting of Representatives, the cooperative bank has its Supervisory Board and Management Board.

Competences of the Supervisory Board and the Management Board of cooperative banks are set forth in their articles of associations, laws, regulations, and recommendations of the Polish Financial Supervision Authority.

Organizational structure of the Polish cooperative banking sector

As in most EU countries, the Polish cooperative banking sector operates in a two-tier organizational structure. The main pillar of the sector consists of nearly 550 local cooperative banks, which (except for two banks: Krakowski Bank Spółdzielczy and Bank Spółdzielczy in Brodnica, operating independently) are affiliated in one of the two affiliating banks:

·         Bank Polskiej Spółdzielczości SA in Warsaw, which affiliates 349 cooperative banks,

·         SGB-Bank SA in Poznań, which affiliates 198 cooperative banks.

Affiliating banks play a number of functions for the affiliated cooperative banks, including:

·         keeping bank accounts and operating interbank settlements of cooperative banks;

·         calculating and maintaining obligatory provisions of cooperative banks on the account kept in the National Bank of Poland;

·         making settlements of transactions carried out with the use of electronic payment instruments;

·         charging and paying contributions of cooperative banks to the Bank Guarantee Fund;

·         unifying and developing IT and telecommunications systems in cooperative banks;

·         running marketing and promotional campaigns for cooperative banks.

Apart from the basic activities carried out on behalf of cooperative banks, affiliating banks also conduct banking and other activities specified in the Act - Banking Law and in other Acts, as well as set forth in the affiliation agreements concluded between cooperative banks and affiliating banks, and in the articles of association of each affiliating bank.

Due to the entry into force of new EU and national regulations, new prudence and liquidity standards were imposed on Polish banks. In order to meet these standards, as well as taking into account benefits provided for by the legislative authorities and those resulting from functioning in the cooperative solidarity mechanism, cooperative banks and affiliating banks established in 2015 two new organizational units in the form of cooperatives, i.e. Institutional Protection Systems (IPS).

The primary task of the IPS is to ensure liquidity and solvency of each participant in the System. Within the framework of the IPS audits of each participant are carried out, standards of safe operation are determined, and controlling actions are undertaken on the basis of appropriate and uniformly organized mechanisms for monitoring and classifying risks, in order to mitigate the risk borne by system participants. Accession to the IPS requires that all system participants should meet basic standards resulting from the Protection System Agreement. IPS participants establish an assistance fund to provide financial assistance to the participants of the protection system in the form of guarantees, loans, sureties, or other forms of financing with a view to improve their solvency and prevent bankruptcy.

Participation in the Institutional Protection System allows its participants to jointly meet stringent banking requirements and prudence thresholds, significantly improves security and essentially increases the trust of their clients.