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Bank Pekao SA (BPKD)

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Thursday 06 June, 2019

Bank Pekao SA

ANNOUNCEMENT ON CONVENING ORDINARY GENERAL MEETING

RNS Number : 2973B
Bank Pekao S.A.
05 June 2019
 

Click on, or paste the following link into your web browser, to view the associated PDF document.

 

http://www.rns-pdf.londonstockexchange.com/rns/2973B_1-2019-6-5.pdf

 

http://www.rns-pdf.londonstockexchange.com/rns/2973B_2-2019-6-5.pdf

 

Report 15/2019: ANNOUNCEMENT ON  CONVENING THE ORDINARY GENERAL MEETING OF THE BANK POLSKA KASA OPIEKI SPÓŁKA AKCYJNA FOR THE FINANCIAL YEAR 2018

 

The Management Board of the Bank Polska Kasa Opieki Spółka Akcyjna with the registered office in Warsaw, at  53/57 Grzybowska Street, 00-950 Warsaw, entered into the Entrepreneurs Register kept by the District Court for the capital city of  Warsaw in Warsaw, 12th Commercial Department of the National Court Register (KRS) under the KRS number 0000014843, entry into the KRS dated the 2nd of July 2001, (hereinafter referred to as "the Bank", acting under the art. 395 § 1, 399 § 1, art. 4021 and art. 4022 of the Code of Commercial Companies in consideration of § 8 para. 1 and 2 of the Statute of the Bank Polska Kasa Opieki Spółka Akcyjna, convenes the Ordinary General Meeting for the financial year 2018.

As of the date of the notice the total number of Bank's shares is 262.470.034, equivalent to 262.470.034 votes.

I.    DATE, TIME AND VENUE OF THE ORDINARY GENERAL MEETING OF THE BANK AND DETAILED AGENDA OF THE MEETING

The Management Board convenes the Ordinary General Meeting for the financial year 2018 to be held on the 26th of June 2019 at 11.00 hours in Warsaw, at 31 Żwirki i Wigury Street in Building B of the Lipowy Office Park, with the following agenda:

1.  Opening of the Ordinary General Meeting of the Bank Polska Kasa Opieki Spółka Akcyjna.

2. Election of the Chairman of the Ordinary General Meeting of the Bank Polska Kasa Opieki Spółka Akcyjna.

3. Verification whether the Ordinary General Meeting of the Bank Polska Kasa Opieki Spółka Akcyjna was convened correctly and is capable to take resolutions.

4. Election of the Vote Counting Committee.

5. Adoption of the Agenda of the Ordinary General Meeting of the Bank Polska Kasa Opieki Spółka Akcyjna.

6. Review of the Report of the Bank's Management Board on the Bank Pekao S.A.'s operations in the financial year 2018.

7. Review of the Individual Financial Statements of the Bank Pekao S.A. for the year ended on the 31st  December 2018.

8. Review of the Report of the Bank's Management Board on the Bank Pekao S.A. Capital Group's operations in the financial year 2018.

9. Review of the Consolidated Financial Statements of the Bank Pekao S.A. Capital Group for the year ended on the 31st of December, 2018.

10.    Review of the request of the Bank's Management Board related to the coverage of undivided loss from previous years, which has arisen as a result of change in accounting principles in relation to the application of the International Financial Reporting Standard no. 9 ("Financial Instruments") for the first time. 

11. Review of the request of the Bank's Management Board related to the net profit distribution of the Bank Polska Kasa Opieki Spółka Akcyjna for the financial year 2018.

12. Review of the Report of the Supervisory Board of the Bank Polska Kasa Opieki Spółka Akcyjna on their operations in 2018 and results of the assessment of: reports on operations of the Bank Polska Kasa Opieki S.A. and the Capital Group of the Bank Polska Kasa Opieki Spółka Akcyjna for the year 2018, financial reports of the Bank Polska Kasa Opieki Spółka Akcyjna and the Capital Group of the Bank Polska Kasa Opieki Spółka Akcyjna for the year ended on the 31st of December 2018, requests of the Bank's Management Board on the coverage of undivided loss from previous years, which has arisen as a result of change in accounting principles in relation to the application of the International Financial Reporting Standard no. 9 for the first time and profit distribution of the Bank Polska Kasa Opieki Spółka Akcyjna for the year 2018.

13.    Taking resolutions on:

1) approval of the Report of the Bank's Management Board on the Bank Pekao S.A.'s operations in  2018,

2) approval of Individual Financial Statements of the Bank Pekao S.A. for the year ended on the 31st of December 2018,

3) approval of the Report of the Bank's Management Board on the Bank Pekao S.A. Capital Group's operations in  2018,

4) approval of the Consolidated Financial Statements of the Capital Group of the Bank Pekao S.A. for the year ended on the 31st  December 2018,

5) coverage of undivided loss from previous years, which has arisen as a result of change in accounting principles in relation to the application of the International Financial Reporting Standard no. 9 ("Financial Instruments") for the first time and use of reserve capital of the Bank Polska Kasa Opieki Spółka Akcyjna for this purpose,

6) net profit distribution of the Bank Polska Kasa Opieki Spółka Akcyjna for 2018,

7) approval of the Report of the Supervisory Board of the Bank Polska Kasa Opieki Spółka Akcyjna on their operations in 2018,

8) granting a vote of approval to the members of the Management Board of the Bank Polska Kasa Opieki Spółka Akcyjna for fulfilment of their duties in 2018,

9) granting a vote of approval to the members of the Supervisory Board of the Bank Polska Kasa Opieki Spółka Akcyjna for fulfilment of their duties in 2018.

14. Presentation of material elements of the plan of dividing the Centralny Dom Maklerski Pekao S.A., the report of the Management Board dated the 27th of February 2019, justifying the division of the Centralny Dom Maklerski Pekao S.A., opinion of the chartered auditor and any material changes related to assets and liabilities that have occurred between the date the division plan was executed and the date of passing the resolution on the division of the Centralny Dom Maklerski Pekao S.A.  

15. Taking a resolution on the division of the Centralny Dom Maklerski Pekao S.A.

16.    Report on the assessment of the Remuneration Policy of the Bank Polska Kasa Opieki Spółka Akcyjna and taking a resolution on that matter.

17.    Presentation by the Supervisory Board of the Report on the assessment of the Bank Polska Kasa Opieki Spółka Akcyjna's application of the Corporate Governance Principles for Supervised Institutions in 2018.  

18.    Review of the request of the Bank's Management Board and taking resolutions on amending the Statute of the Bank Polska Kasa Opieki Spółka Akcyjna.

19.    Closing of the Ordinary General Meeting of the Bank Polska Kasa Opieki Spółka Akcyjna.

II.   DATE OF REGISTRATION OF PARTICIPATION IN THE ORDINARY GENERAL MEETING OF THE BANK AND INFORMATION ON THE RIGHT TO PARTICIPATE IN THE ORDINARY GENERAL MEETING OF THE BANK.

The date of registration of participation in the Bank's Ordinary General Meeting falls sixteen days prior to the date of the Ordinary General Meeting (date of registration), i.e. on the 10th of June, 2019. Only people being the Bank's Shareholders as of the 10th of June, 2019 i.e. the date of registration of the participation in the Ordinary General Meeting, have the right to participate in the Ordinary General Meeting of the Bank.

At the demand of the person entitled under the dematerialised bearer shares of the Bank, reported not earlier than after the announcement of the notice of Ordinary General Meeting, and not later than on the first working day after the registration date, i.e. not later than on the 11th of June, 2019, the entity running the securities deposit account shall issue a personal certificate confirming the right to participate in the Ordinary General Meeting.

The list of Shareholders entitled to participate in the Ordinary General Meeting shall be determined by the Bank's Management Board based on the list prepared by the Krajowy Depozyt Papierów Wartościowych S.A. (the Central Securities Depository of Poland S.A.) under the regulations on trading in financial instruments.

III.  PROCEEDINGS RELATED TO THE PARTICIPATION IN THE ORDINARY GENERAL MEETING OF THE BANK POLSKA KASA OPIEKI SPÓŁKA AKCYJNA AND EXERCISING THE VOTING RIGHT.

1.   Information on the Shareholder's right to demand specific matters to be entered on the agenda of the Ordinary General Meeting

Shareholder or Shareholders representing at least one twentieth of the Bank's share capital are entitled to demand specific matters to be included on the agenda of the Ordinary General Meeting. The demand of a Shareholder or Shareholders shall be notified to the Bank's Management Board not later than twenty one days before the stipulated date of the Ordinary General Meeting, i.e. not later than on the 5th of June, 2019.

The request shall include justification or a draft of a resolution related to the suggested item on the agenda.

The demand may be filed in writing (i.e. served in person with receipt confirmation or sent to the Bank with mailing confirmation and receipt confirmation) to the address: Bank Polska Kasa Opieki Spółka Akcyjna Biuro Obsługi Organów Korporacyjnych, ul. Żwirki i Wigury 31, 02-091 Warszawa or in electronic form (e-mail) by sending electronic message to the e-mail address: [email protected]

The date of filing the above request shall be deemed the date it was served to the Bank, and in case of using electronic form, the date the above request has entered the system of Bank's electronic mail (entry to the Bank's mail server). The above request may be served using properly filed in and signed form downloaded from the Bank's website, whereas in case of using electronic form, the form and all attached documents are to be sent as appendixes in PDF format. A Shareholder or Shareholders demanding specific matters to be included on the agenda must present, with the request, documents confirming their identity and entitlement to demand specific matters to be included on the agenda of the Ordinary General Meeting, including in particular:

1)       deposit certificate or certificate on the right to participate in the Bank's Ordinary General Meeting, issued by the entity keeping the securities deposit account under the regulations on trading in financial instruments, confirming that the addressee is a Shareholder of the Bank and, as of the date of submitting the request, it holds sufficient number of shares, and

2)       in case a Shareholder is an individual - a copy of ID card, passport or other identity-proving document, or

3)       in case of a Shareholder other than an individual - a copy or original of valid entry into a relevant register, and in case the right to represent a Shareholder does not result from a relevant register - both, document(s) confirming the right to represent a Shareholder and a copy or original of a valid entry into a relevant register.

Obligation to submit documents referred to above refers to Shareholders filing their request both, in written and electronic form. Documents shall be attached in a form adequate to the form of the request (paper document or its copy or a scan and conversion to PDF format).  The Bank is entitled to undertake necessary activities to identify a Shareholder or Shareholders and verify the legitimacy of documents sent.

The Bank's Management Board shall immediately, not later however than eighteen days before the stipulated date of the Ordinary General Meeting, announce any changes on the agenda implemented at the demand of a Shareholder or Shareholders. A new agenda shall be announced at the Bank's website, www.pekao.com.pl, and in a way defined for announcing on-going information, under the act on public offering, on conditions for the introduction of financial instruments into the organised trading system and on public companies.

2.   Information on a Shareholder's right to file drafts of resolutions related to matters entered on the agenda of the Ordinary General Meeting or matters that are to be entered on the agenda before the date of the Ordinary General Meeting.

Before the date of the Ordinary General Meeting, a Shareholder or Shareholders of the Bank representing at least one twentieth of the Bank's share capital are entitled to submit to the Bank in writing (i.e. serve in person with receipt confirmation or send to the Bank with mailing confirmation and receipt confirmation) to the address: Bank Polska Kasa Opieki Spółka Akcyjna Biuro Obsługi Organów Korporacyjnych, ul. Żwirki i Wigury 31, 02-091 Warszawa or using electronic communication means (e-mail) by sending electronic message to the dedicated e-mail address: [email protected], any drafts of resolutions related to matters entered on the agenda of the Ordinary General Meeting or matters that are to be entered on the agenda.  The above drafts of resolutions must be submitted to the Bank not later than 24 hours before the date of the Ordinary General Meeting due to the requirement of their announcement at the Bank's website.

The date of filing the above notice shall be deemed the date and time it was served to the Bank, and in case of using electronic form, the date and time the above request has entered the system of Bank's electronic mail (entry to the Bank's mail server).

A Shareholder may submit drafts of resolutions using properly filed in and signed form downloaded from the Bank's website, www.pekao.com.pl, whereas in case of using electronic communication means, the form and all attached documents are to be sent as appendixes in PDF format.

Drafts of resolutions shall be published immediately at the Bank's website: www.pekao.com.pl

A Shareholder or Shareholders submitting drafts of resolutions shall present documents confirming their identity and entitlement to file drafts of resolutions, including in particular:

1)       deposit certificate or certificate on the right to participate in the Bank's Ordinary General Meeting, issued by the entity keeping the securities deposit account under the regulations on trading in financial instruments, confirming that the addressee is a Shareholder of the Bank and, as of the date of submitting the request, it holds sufficient number of shares, and

2)       in case a Shareholder is an individual - a copy of ID card, passport or other identity-proving document, or

3)       in case of a Shareholder other than an individual - a copy or original of valid entry into a relevant register, and in case the right to represent the Shareholder does not result from a relevant register - both, document(s) confirming the right to represent of a Shareholder and a copy or original of a valid entry into a relevant register.

Obligation to submit documents referred to above refers to Shareholders filing their demand both, in written and electronic form. Documents shall be attached in a form adequate to the form of the request (paper document or its copy or a scan and conversion to PDF format). The Bank is entitled to undertake necessary activities to identify a Shareholder or Shareholders and verify the legitimacy of documents sent.

3.   information on a Shareholder's right to file drafts of resolutions related to matters entered on the agenda during the Ordinary General Meeting.

Each Shareholder is entitled to file drafts of resolutions related to matters entered on the agenda during the Ordinary General Meeting.

4.   Information on the manner of exercising the voting right through a proxy, including, in particular, the forms used for voting through a proxy and a way to notify the Bank about granting a proxy using electronic communication means.

Shareholders are entitled to participate in the Ordinary General Meeting and exercise the voting right in person or through a proxy.

The proxy shall exercise all rights of the Shareholder at the Ordinary General Meeting, unless the power of attorney specifies otherwise. The proxy is entitled to grant further power of attorney, if it results from the provisions of the power of attorney.  The proxy can represent more than one Shareholder and vote differently from each Shareholder's shares. A Shareholder holding shares deposited on more than one securities deposit account can establish separate proxies to exercise rights from shares deposited on each of the accounts. A Shareholder holding shares deposited on a collective securities deposit account can establish separate proxies to exercise rights from shares deposited on that account.

If a Shareholder is represented at the Ordinary General Meeting by a proxy who is a Member of the Management Board, a Member of the Supervisory Board, employee of the Bank, a member of Bank's bodies or an employee of a Bank's subsidiary, the granted power of attorney is valid for a Shareholder's representation at one General Meeting only. A proxy is obliged to inform a Shareholder about any circumstances that may indicate that a conflict of interest has occurred or is possible to occur.  In such a case granting further power of attorney is excluded.

Power of attorney to participate in the Ordinary General Meeting and exercise the voting right must be granted in writing or in electronic form.  Power of attorney granted in electronic form does not require to be certified with safe electronic signature verified with valid qualified certificate.  Power of attorney issued in a foreign language shall be translated into Polish by a certified translator. Power of attorney which is not translated by a certified translator shall bring no legal effects.

A Shareholder may notify the Bank about granting a power of attorney in electronic form, using electronic mail, to a dedicated e-mail address:  [email protected]

The notice on granting the power of attorney in electronic form shall contain a Shareholder's telephone number and e-mail address as well as a telephone number and e-mail address of a proxy for the Bank to communicate with a Shareholder and a proxy. In case of any doubts, the Bank is entitled to undertake further activities for the verification of the validity of the power of attorney granted in an electronic form and identification of a Shareholder and a proxy.  Notice on granting a power of attorney shall also indicate the scope of a power of attorney, i.e. stipulate the number of shares from which the voting right will be exercised as well as the date of the General Meeting on which the rights will be exercised.

The notice shall be accompanied by copies of documents proving the Shareholder's identity (scan and conversion to PDF format), in particular:

1)       in case a Shareholder is an individual - a copy of ID card, passport or other identity-proving document, or

2)       in case of a Shareholder other than an individual - a copy or original of valid entry into a relevant register, and in case the right to represent the Shareholder does not result from a relevant register - both, document(s) confirming the right to represent of a Shareholder and a copy or original of a valid entry into a relevant register (valid as of the date of granting a power of attorney).

Notice on granting a power of attorney in an electronic form must be filed 24 hours before the date of the Ordinary General Meeting at the latest, due to the need to carry out verification activities. The Bank shall undertake relevant activities aiming at identification of a Shareholder and a proxy in order to verify the validity of the power of attorney granted in an electronic form.  The verification can include an identity verification question in electronic form or by phone asked to a Shareholder or a proxy to confirm the fact of granting a power of attorney and its scope.

The Bank at its website shall make a specimen of the form of a notice on granting a power of attorney in electronic form available for downloading, and which may be used by a Shareholder to notify the Bank about granting a power of attorney in electronic form.  That form, having filled it in accordance with the manual contained therein, shall be sent by a Shareholder to a dedicated e-mail address stipulated above.

The proxy, to whom the power of attorney has been granted, shall be obliged to submit during the checking of absence list at the Ordinary General Meeting a document evidencing that a power of attorney has been granted in electronic form and identifying a Shareholder who has submitted that statement and document identifying a proxy.

A specimen of the form allowing for exercising the voting right by a proxy, containing data stipulated in art.  4023 § 3 of the Code of Commercial Companies titled - "A form allowing for exercising the voting right by a proxy at the Ordinary General Meeting of the Bank Polska Kasa Opieki Spółka Akcyjna with the registered office in Warsaw" was published at the Bank's website, www.pekao.com.pl. If the proxy votes using the form, he or she must deliver the form to the Chairman of the Ordinary General Meeting, at the latest before the end of the voting on the resolution which, as per the Shareholder's instruction, is to be voted using it.

Representatives of legal entities shall have an original or a copy certified by a notary of valid, i.e. issued within the last 3 months, certified copy of a relevant register, and in case the right to represent the Shareholder does not result from a relevant register, they shall have a written power of attorney (original or a copy certified by a notary) and original or a copy certified by a notary of an entry to a relevant register, valid as of the date of granting the power of attorney.

5.   Information on the possibility and manner of participating in the Ordinary General Meeting using electronic communication means.

Taking into account that the Bank's Shareholders are of large number, in different geographical locations and use various languages for communication; therefore, in order to meet by the Bank the requirements necessary for proper identification of Shareholders and keep adequate level of electronic communication safety, it is necessary for the Bank to provide high tech solutions, which the Bank does not currently have at its disposal, the Bank's Management Board, under art. 4065 § 2 of the Code of Commercial Companies and § 8a para. 2 of the Bank's Statute, took a decision that it will not be possible to participate in the Ordinary General Meeting for 2018 using electronic communication means, referred to in art. 4065 § 1 item 2 and 3 of the Code of Commercial Companies (two-way, real-time communication and exercising the voting right using electronic communication means).

6.   Information on the manner and form of communication during the General Meeting using electronic communication means.

With regard to the decision of the Bank's Management Board, referred to in section 5, there is no need to define the manner and form of communication during the Ordinary General Meeting using electronic communication means.

7.   Information on the manner of exercising the voting right by mail as well as on the manner of exercising the voting right and objecting to resolutions using electronic communication means

With regard to the decision of the Bank's Management Board, referred to in section 5, there is no need to define the manner of exercising the voting right and objecting to resolutions using electronic communication means.

The rules and regulations of Bank's General Meetings do not provide for the possibility to exercise the voting right by mail.

IV.  POSSIBILITY TO OBTAIN INFORMATION RELATED TO THE GENERAL MEETING

Full documentation to be presented at the Ordinary General Meeting, including the drafts of resolutions and information related to the Ordinary General Meeting will be published at the Bank's website, at www.pekao.com.pl, from the date the Ordinary General Meeting has been convened.

A Shareholder entitled to participate in the Ordinary General Meeting may obtain, in hard copy, a full text of documentation to be presented at the Ordinary General Meeting and drafts of resolutions or remarks of the Bank's Management Board or Supervisory Board in the Bank Headquarters, in Warsaw, at  31 Żwirki i Wigury Street, Building B on working days, between 10 a.m. and 3 p.m.

V.   ELECTRONIC COMMUNICATION OF A SHAREHOLDER WITH THE BANK

Subject to restrictions provided for in the Code of Commercial Companies, the Bank's Shareholders can contact the Bank using electronic communication means. In particular, the Bank's Shareholders are entitled to submit motions, requests and sent notices and documents. Shareholders can communicate with the Bank in electronic form using dedicated e-mail address: [email protected]

A Shareholder by using electronic communication means shall bear a sole risk related to their use.

The Bank shall be liable for safety, confidentiality and processing under the applicable regulations, of information contained in documents sent by electronic means, from the moment the documents enter into the electronic mail system of the Bank (entry to the Bank's mail server).

In case a Shareholder sends documents to the Bank using electronic means, which originally were made in the language other than Polish, they shall be accompanied by their certified translation into Polish.  All documents sent by a Shareholder to the Bank, and by the Bank to a Shareholder by electronic means shall be scanned to PDF format.

VI.  LIST OF SHAREHOLDERS

List of Shareholders entitled the participate in the Ordinary General Meeting will be presented in the Bank, in Warsaw,  31 Żwirki i Wigury Street, Building B, three working days before the Ordinary General Meeting is to be held, i.e. on the 21st, 24th and 25th of June, 2019.

A company Shareholder may demand sending him or her a list of shareholders entitled to participate in the Ordinary General Meeting, free of charge, by e-mail, giving the e-mail address, to which the list shall be sent.

Pursuant to art.  407 § 2 of the Code of Commercial Companies, the Bank's Shareholder is entitled to demand copies of requests in matters included on the agenda, one week before date of the Ordinary General Meeting, i.e. from the 19th of June 2019.

VII. ADDRESS OF A WEBSITE WHERE INFORMATION ON ORDINARY GENERAL MEETING WILL BE PUBLISHED

Any information related to the Ordinary General Meeting as well as relevant forms are made available at the Bank's website: www.pekao.com.pl

VIII.   OTHER INFORMATION

Pursuant to art. 402 § 2 of the Code of  Commercial Companies, in consideration of planned amendments of the Bank's Statute, the Bank's Management Board informs about currently applicable provisions and the text of planned amendments of the Bank's Statute.

The amendments of the Statute proposed by the Bank's Management Board include:

 

1)       giving the current § 6 para. 1 item 17 of the Bank's Statute in the current wording:

 

"17) Providing payment services:

a) within the scope of issuing payment instruments and execution of payment operations with the use of such instruments,

b) as a paying agent

and performing activities connected these services,"

 

a new wording:

 

"17) Providing payment services:

a)    within the scope of issuing payment instruments and execution of payment operations with the use of such instruments,

b)   as a paying agent,

c)    within the scope of initiating payment transaction and

d)   within the scope of access to account information

and performing activities connected with these services,"

 

2)       giving the current § 6 para. 1 item 20 of the Bank's Statute in the current wording:

 

"20) Acquiring or purchasing shares and rights arising from shares of stock of another legal entity other than a bank, or investment in investment funds,"

 

a new wording:

 

"20) Taking up shares or acquisition of shares and rights to vote, shares of other legal entity not being a bank or participation units and investment certificates of investment funds,"

 

3)       giving the current § 6 para. 1 item 24 of the Bank's Statute in the current wording:

 

"24) Purchasing and selling real estate,"

 

a new wording:

 

"24) Purchasing and selling real estate, as well as letting them on hire or lease,"

 

4)       replacing a full stop with a comma in § 6 para. 1 item 36  of the Bank's Statute and adding a new item 37 of the wording:

 

"37) Performing acquisition activities for the benefit of entities offering employee capital plans and performing activities related to servicing participants of employee capital plans,"

 

5)       adding in § 6 para. 1 of the Bank's Statute a new item 38 of the wording:

 

"38) Performing acquisition activities for the benefit of voluntary pension funds and servicing participants of voluntary pension funds,"

 

6)       adding in § 6 para. 1 of the Bank's Statute a new item 39 of the wording:

 

"39) Keeping stock records under the concluded contracts,"

 

7)       adding in § 6 para. 1 of the Bank's Statute a new item 40 of the wording:

 

"40) Financial and operational participation in international projects and ventures,"

 

8)       adding in § 6 para. 1 of the Bank's Statute a new item 41 of the wording:

 

"41) Running online platform of social financing (crowdfunding) that combines financing granted by the Bank with social financing,"

 

9)       adding in § 6 para. 1 of the Bank's Statute a new item 42 of the wording:

 

"42) Providing services to the benefit of companies associated with the Bank or Bank's shareholders, including among others:

a)  use of information technologies and systems, including among others the use of software, IT infrastructure and data processing,

keeping accounting books

and financial and organisational participation in projects realized jointly with the capital related companies with the Bank or Bank's Shareholders,"

10)     adding in § 6 para. 1 of the Bank's Statute a new item 43 of the wording:

 

 

11)     adding in § 6 para. 1 of the Bank's Statute a new item 44 of the wording:

 

"44) Execution, independently or jointly with other entities, of other economic projects, domestically and abroad, including agency services in offering financial and non-financial services."

 

12)     giving the current § 13 item 17 of the Bank's Statute in the current wording:

 

"17) Appointment of the entity authorised to examine financial statements and review the financial statements,"

 

 a new wording:

 

"17) Selection of auditing company to audit financial statements,"

 

13)     adding in §14, para. 5 of the Bank's Statute a new item 11 in the wording:

 

"11) is not a member of the Bank's Supervisory Board for longer than 12 years."

 

14)     giving the current § 14 para. 5a of the Bank's Statute in the current wording:

 

"At least three independent members of the Supervisory Board should have competence in accounting or financial revision, including at least one of them should additionally fulfill the conditions of independence as defined in art. 86 section 5 of the act of 7 May 2009 on chartered accountants and their governing body, entities authorized to examine financial statements and on public supervision."

 

a new wording:

 

"5a. The majority of the members of the Supervisory Board, being the members of the Audit Committee, including its chairman, shall meet the independency conditions within the meaning of art. 129 para. 3 of the act of 11 May, 2017 on chartered auditors, auditing companies and public supervision. Members of the Supervisory Board being the members of the Audit Committee shall have the knowledge and skills in the fields of the Bank's operations, whereas the condition is considered met if at least one member of the Audit Committee has the knowledge and skills in these fields or individual members have the knowledge and skills in these fields within some specific scopes. At least one member of the Supervisory Board being the member of the Audit Committee shall have the knowledge and skills in accountancy and auditing of financial statements".

 

15)     deleting from § 18 of the Bank's Statute the current item18 in a wording:

 

"18) Approval of motions of the Management Board of the Bank related to outsourcing in strategic areas of business activity conducted by the Bank or in case of the commission of services having the value not lower than Euro 1,000,000,".

 

16)     giving the current § 18 item 21 of the Bank's Statute in the current wording:

 

"21) Performance of assessment of intention of termination of an agreement with an entity authorized to examine financial statements,"

 

a new wording:

 

"21) Assessment of the intent to terminate the agreement with auditing company authorised to audit financial statements,"

 

17)     giving the current § 18 item 24 of the Bank's Statute in the current wording:

 

"24) Approval of the recovery plan of the Bank or the recovery plan of the Bank's Capital Group prepared under the provisions of the Banking Act. "

 

a new wording:

 

"24) Approval of the Bank Recovery Plan or Group Recovery Plan, prepared under the regulations of the Banking Act."

 

18)     giving the current § 20 para. 3 of the Bank's Statute in the current wording:

 

"3. The Management Board of the Bank shall operate on the basis of the Rules of procedure adopted by it. Rules of procedure shall in particular define the matters which require joint consideration by the Management Board, as well as the procedure for adopting a resolution in writing."

 

a new wording:

 

"3. The Management Board of the Bank shall operate on the basis of the Rules of procedure adopted by it. Rules of procedure shall in particular define the matters which require joint consideration by the Management Board. The Rules and Regulations shall define the principles of holding the Board's meetings, including the Board's meetings using the means of distance communication, and the principles of adopting resolutions by written procedure or by using the means of distance communication."

 

19)     giving the current § 20 para. 4 of the Bank's Statute in the current wording:

 

"Resolutions of the Bank Management Board may be adopted after all members have been duly notified of the Management Board meeting. Resolutions are deemed valid when adopted in the presence of at least half of the Management Board members."

 

a new wording:

 

"4. Resolutions of the Bank Management Board may be adopted after all members have been duly notified of the Management Board meeting. Resolutions are deemed valid when adopted at the Management Board meeting in the presence of at least half of the Management Board members."

 

20)     adding in § 20 of the Bank's Statute a new item 6 in the wording:

 

"6. Adopting resolutions by written procedure and by using the means of distance communication shall not apply to resolutions taken in secret voting."

 

21)     giving the current § 25 of the Bank's Statute in the current wording:

 

"§ 25

1. Equity funds of the Bank, including positions decreasing them, in accordance with the regulations of Banking Law, shall consist of:

1) Basic funds,

2) Supplementary capital in the amount not higher than the basic funds of the Bank.

2. The basic funds of the Bank are:

1) Statutory capital,

2) Obligatory reserve equity,

3) Reserve equities, including the fund for conducting brokerage activity,

4) General risk fund for unidentified risk of the bank activity,

5) Retained profit from previous years,

6) Profit under approval and net profit of the current reporting period, calculated in accordance with the applicable accounting principles, minus any anticipated charges and dividends whose amounts should not exceed the amount of the net profit, as verified by expert auditors."

 

a new wording:

 

"§ 25 Basic capital (funds) of the Bank include:

1) Statutory capital,

2) Obligatory reserve equity,

3) Reserve equities, including the fund for conducting brokerage activity,

4) General risk fund for unidentified risk of the bank activity,

5) Revaluation reserve,

6) Retained result from previous years,

7) Net result of the current reporting period."

 

22)     giving the current § 26 para. 2 of the Bank's Statute in the current wording:

 

"2. Bank shall create funds provided for in binding legal acts.

 

a new wording:

 

"2. Bank shall create funds under the principles provided for in the applicable legal acts."

 

23)     giving the current title of Chapter VII of the Bank's Statute in the current wording:

 

"VII. INTERNAL CONTROL"

 

a new wording:

 

"VII. INTERNAL CONTROL AND RISK MANAGEMENT"

 

24)     giving the current § 38 para. 1 of the Bank's Statute in the current wording:

 

"1. The aim of the internal control system of the Bank is to ensure:

1) compliance of Bank's operations with law, internal regulations and market standards and with the strategy of the Bank,

2) effectiveness and efficiency of the Bank's activity,

3) protection of assets,

4) prevention of losses and errors,

5) security, stability and effectiveness of operations,

6) reliability and completeness of accounting, management information and reliability of financial reporting,

7) compliance of transactions with generally binding provisions of law, supervisory rules and internal policies, plans, regulations and procedures,

8) support of the decision-making process,

9) observance of risk management principles in the Bank."

 

a new wording:

 

"1. The purpose of the system of internal Bank's control is to ensure:

1)       efficiency and effectiveness of the Bank's activity;

2)       credibility of financial reporting

3)       observance of risk management principles in the Bank.

4)       compliance of the Bank's operations with law, internal regulations and market standards."

 

25)     giving the current § 38 para. 2 item 2 of the Bank's Statute in the current wording:

 

"2) a compliance unit whose task is to identify, evaluate, control and monitor the risk of non-compliance of Bank's operations with law, internal regulations and market standards and to present relevant reports;"

 

a new wording:

 

"2) independent a compliance unit whose task is to identify, evaluate, control and monitor the risk of non-compliance of Bank's operations with law, internal regulations and market standards and to present relevant reports;"

 

26)     adding in § 38 of the Bank's Statute a new item 5 in the wording:

 

"5. As a part of the risk management system, the Bank shall:

1)      apply formalised principles intended to determine the amount of risk taken and the principles of risk management,

2)      apply formalised principles intended to identification, measurement or estimation and monitoring of the risk present in the Bank's operations, taking also into account the forecasted level of risk in the future,

3)      apply formalised risk-reducing limits as well as procedures for the event the limits are exceeded.

4)      apply formalised system of management reporting which enables monitoring of risk level,

5)      have organisational structure adjusted to the amount and parameters of risk incurred by the Bank."

 

For the efficient conduct of the meeting, the Management Board kindly asks the participants to arrive 45 minutes before the planned time of starting the General Meeting.

Drafts of resolutions constitute an appendix to the present Notice.

The Bank's Management Board

 

 

 

Draft resolutions of the Ordinary General Meeting of

Bank Polska Kasa Opieki Spółka Akcyjna on 26 June 2019

 

The Bank's Management Board presents drafts of resolutions and documents to be included in the order of business at the AGM, important to the resolutions to be voted on at the AGM, which were previously not disclosed to the general public.

 

Regarding item 2 in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of electing the Chairman of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

 

 

Pursuant to section 409 (1) of commercial companies code and section 6 (1) of the Regulations of Ordinary General Meetings of Bank Polska Kasa Opieki Spółka Akcyjna, the Ordinary General Meeting elects .................................................................... as the Chairman of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna.

 

Statement of reasons for the resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of electing the Chairman of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

 

 

The Chairman will be elected during the AGM, pursuant to section 409 (1) of commercial companies code and section 6 (1) of the Regulations of Ordinary General Meetings of Bank Polska Kasa Opieki Spółka Akcyjna.

 

Regarding item 4 in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of electing the Ballot Counting Committee

 

 

Pursuant to section 8 (1)-(3) of the Regulations of Ordinary General Meetings of Bank Polska Kasa Opieki Spółka Akcyjna, the Ordinary General Meeting elects a Ballot Counting Committee comprising ...................................................................................................................................................................

 

Statement of reasons for the resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of electing the Ballot Counting Committee

 

The Ballot Counting Committee will be elected during the AGM, pursuant to section 8 (1)-(3) of the Regulations of Ordinary General Meetings of Bank Polska Kasa Opieki Spółka Akcyjna.

 

Regarding item 5 in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of adopting an agenda of the Ordinary General Meeting

of Bank Polska Kasa Opieki Spółka Akcyjna

 

 

The Ordinary General Meeting adopts an agenda in the form specified by the Bank's Management Board  in the notice of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna, pursuant to section 4021 of commercial companies' code.

Regarding item 13 clause 1) in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of approving the Report of the Bank's Management Board

on the operations of Bank Pekao S.A. for 2018

 

Pursuant to section 393 (1) and section 395 (2) (1) of commercial companies' code and section 13 (1) of the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

The Report of the Bank's Management Board  on the operations of Bank Pekao S.A. for 2018 is approved.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

 

Regarding item 13 clause 2) in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of approving the Separate Financial Statement of

Bank Pekao S.A. for the year ended 31 December 2018

 

Pursuant to section 393 (1) and section 395 (2) (1) of commercial companies' code and section 13 (1) of the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

The Separate Financial Statement of Bank Pekao S.A. for the year ended 31 December 2018, comprising the below documents, is hereby approved:

a) statement of financial position drawn up as of 31 December 2018, presenting total assets versus liabilities and equities in the amount of PLN 184,347,175,879.81 (say: one hundred eighty four billion three hundred forty seven million one hundred seventy five thousand eight hundred seventy nine złoty 81/100),

b) statement of comprehensive income for the financial year ended 31 December 2018, presenting a comprehensive income of PLN 2,333,521,806.94 (say: two billion three hundred thirty three million five hundred twenty one thousand eight hundred six złoty 94/100),

c) profit and loss statement for the financial year ended 31 December 2018, presenting a net profit of 2,310,599,572.17 (say: two billion three hundred ten million five hundred ninety nine thousand five hundred seventy two złoty 17/100),

d) statement of changes in equity for the financial year ended 31 December 2018, presenting a reduction in equity by PLN436,536k (say: four hundred thirty six million five hundred thirty six thousand złoty),

e) cash flow statement for the financial year ended 31 December 2018, presenting an increase in net cash by PLN 7,939,063k (say: seven billion nine hundred thirty nine million sixty three thousand złoty),

f) notes with a description of significant accounting policies and other information.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

Regarding item 13 clause 3) in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of approving the Report of the Bank's Management Board

on the operations of Bank Pekao S.A. Corporate Group for 2018

 

Pursuant to section 395 (5) and section 13 (5) of the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

The Report of the Bank's Management Board  on the operations of Bank Pekao S.A. Corporate Group for 2018 is approved.

§ 2.

 

This resolution comes into force on the date of its adoption.

 

Regarding item 13 clause 4) in the agenda

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of approving the Consolidated Financial Statement of Bank Pekao S.A. Corporate Group for the year ended 31 December 2018

 

Pursuant to section 395 (5) and section 13 (5) of the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

The Consolidated Financial Statement of Bank Pekao S.A. Corporate Group for the year ended 31 December 2018, comprising the below documents, is hereby approved:

a) consolidated statement of financial position drawn up as of 31 December 2018, presenting total assets versus liabilities and equities in the amount of PLN 191,089,805,438.71 (say: one hundred ninety one billion eighty nine million eight hundred five thousand four hundred thirty eight złoty 71/100),

b) consolidated statement of comprehensive income for the financial year ended 31 December 2018, presenting a comprehensive income of PLN 2,313,654,006.17 (say: two billion three hundred thirteen million six hundred fifty four thousand six złoty 17/100),

c) consolidated profit and loss statement for the financial year ended 31 December 2018, presenting a net profit of 2,287,809,961.99 (say: two billion two hundred eighty seven million eight hundred nine thousand nine hundred sixty one złoty 99/100),

d) consolidated statement of changes in equity for the financial year ended 31 December 2018, presenting a reduction in equity by PLN459,597k (say: four hundred fifty nine million five hundred ninety seven thousand złoty),

e) consolidated cash flow statement for the financial year ended 31 December 2018, presenting an increase in net cash by PLN 7,894,226k (say: seven billion eight hundred ninety four million two hundred twenty six thousand złoty),

f) notes with a description of significant accounting policies and other information

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

 

 

Regarding item 13 clause 5) in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of covering the retained loss resulting from the change in accounting policies in connection with the first application of IFRS 9 ('Financial Instruments'), using the reserve capital of Bank Polska Kasa Opieki Spółka Akcyjna,

 

 

Pursuant to section 395 (2) (2) and section 395 (5) of commercial companies' code, section 30 (4) in conjunction with section 13 (12) of the Statute of Bank Polska Kasa Opieki S.A., the Ordinary General Meeting resolves as follows:

 

§ 1.

 

The retained balance sheet loss of Bank Polska Kasa Opieki Spółka Akcyjna in the amount of PLN 936,747,994.04 (say: nine hundred thirty six million seven hundred forty seven thousand nine hundred ninety four thousand złoty 04/100) is covered from the reserve capital. The loss resulted from the change in accounting policies in connection with the first application of IFRS 9 ('Financial Instruments').

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

Statement of reasons for the Resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of covering the retained loss resulting from the change in accounting policies in connection with the first application of IFRS 9 ('Financial Instruments'), using the reserve capital of Bank Polska Kasa Opieki Spółka Akcyjna.

 

Starting from 1 January 2018, the Bank uses International Financial Reporting Standard no.9 ('Financial Instruments') ('IFRS 9'), which superseded International Accounting Standard no. 39. The implementation of IFRS 9 resulted in a change in the method of valuating credit reserves, causing an increase in these reserves by a net amount PLN 936,748k. This amount was classified as a retained result (loss) that arose on 1 January 2018. As a result, this amount constitutes a retained loss and not a component of the profit and loss statement for financial year 2018. Furthermore, the above loss is not covered and has not been allocated due to the fact that the Bank's General Meeting has not yet adopted a resolution as to the manner of its coverage. Until the loss is covered, it should reduce the amount that can be distributed among the shareholders. When the General Meeting adopts a resolution to cover the loss using reserve capital, the loss ceases to exist. If no resolution to cover the retained loss is adopted, the amount that can be paid out to shareholders as part of distribution of net profit for 2018 should be reduced, by reducing this amount by the uncovered retained loss.

 

Regarding item 13 clause 6) in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of distributing the net profit of Bank Polska Kasa Opieki Spółka Akcyjna for 2018

 

 

Pursuant to section 395 (2) (2), section 348 (4) and section 396 (4) and (5) of commercial companies' code, section 13 (2) and (6) and section 33 (1) (2) and (4) of the Statute of Bank Polska Kasa Opieki S.A., the Ordinary General Meeting resolves as follows:

 

 

§ 1.

 

The net profit of Bank Polska Kasa Opieki Spółka Akcyjna for 2018, in the amount of PLN 2,310,599,572.17 (say: two billion three hundred ten million five hundred ninety nine thousand five hundred seventy two złoty 17/100) is distributed as follows:

1) 74.97% of the Bank's net profit, i.e. the amount of PLN 1,732,302,224.40 (say: one billion seven hundred thirty two million three hundred two thousand two hundred twenty four złoty 40/100), is allocated to dividend,

2) the amount of PLN 578,297,347.77 (say: five hundred seventy eight million two hundred ninety seven thousand three hundred forty seven złoty 77/100) is allocated to reserve capital.

 

§ 2.

 

The amount of dividend per share is PLN 6.60 (say: six złoty 60/100).

 

§ 3.

 

The ex-dividend date is set for 10 July 2019.

 

§ 4.

 

The dividend payable date is set for 30 July 2019.

 

§ 5.

 

This resolution comes into force on the date of its adoption.

 

 

Statement of reasons for the Resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of distributing the net profit of Bank Polska Kasa Opieki Spółka Akcyjna for 2018.

 

When presenting its request with regards to the distribution of net profit of Bank Pekao S.A. for 2018, the Bank's Management Board  considered the following:

1.   the individual recommendation of the Financial Supervision Authority to increase equity through retaining at least 25% of net profit generated between 1 January and 31 December 2018,

2.   the Bank's strong capital position ensuring its safe position even in conditions of market volatility and enabling the implementation of development plans, as confirmed by stress testing exercises carried out by the European Banking Authority,

3.   the macroeconomic situation,

4.   low exposure in mortgage loans denominated in CHF.

 

According to the Board of Director's request, the amount of dividend per share will be PLN 6.60, resulting in a dividend payout ratio of 74.97% of the Bank's net profit for 2018.

 

The Supervisory Board assessed the request of the Bank's Management Board  with regards to the distribution of net profit and recommended that the Ordinary General Meeting adopt a resolution in this matter.

Adoption of the resolution in the matter of distributing the net profit for 2018 recommended by the Management Board  and Supervisory Board depends on the prior adoption of the resolution in the matter of covering the retained loss.

 

 

Regarding item 13 clause 7) in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of approving the Report of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna on operations in 2018 and the results of assessments of: reports on the operations of Bank Polska Kasa Opieki S.A. and Bank Polska Kasa Opieki Spółka Akcyjna Corporate Group for 2018, financial statements of Bank Polska Kasa Opieki S.A. and Bank Polska Kasa Opieki Spółka Akcyjna Corporate Group for the year ended 31 December 2018, requests from the Bank's Management Board  in the matter of covering the retained loss resulting from the change in accounting policies in connection with the first application of IFRS 9, and of distributing the net profit of Bank Polska Kasa Opieki Spółka Akcyjna for 2018, as well as the situation of Bank Polska Kasa Opieki Spółka Akcyjna , including the assessment of internal control mechanisms, risk management and compliance, and the rationality of the Bank's policy with regards to sponsoring and charitable activities.

 

Pursuant to section 395 (5) of commercial companies' code and section 13 (3) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

The AGM approves the Report of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna on operations in 2018 and the results of assessments of: reports on the operations of Bank Polska Kasa Opieki S.A. and Bank Polska Kasa Opieki Spółka Akcyjna Corporate Group for 2018, financial statements of Bank Polska Kasa Opieki S.A. and Bank Polska Kasa Opieki Spółka Akcyjna Corporate Group for the year ended 31 December 2018, requests from the Bank's Management Board  in the matter of covering the retained loss resulting from the change in accounting policies in connection with the first application of IFRS 9, and of distributing the net profit of Bank Polska Kasa Opieki Spółka Akcyjna for 2018, as well as the situation of Bank Polska Kasa Opieki Spółka Akcyjna , including the assessment of internal control mechanisms, risk management and compliance, and the rationality of the Bank's policy with regards to sponsoring and charitable activities.

 

§ 2.

This resolution comes into force on the date of its adoption.

 

Statement of reasons for the Resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of approving the Report of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna on operations in 2018 and the results of assessments of: reports on the operations of Bank Polska Kasa Opieki S.A. and Bank Polska Kasa Opieki Spółka Akcyjna Corporate Group for 2018, financial statements of Bank Polska Kasa Opieki S.A. and Bank Polska Kasa Opieki Spółka Akcyjna Corporate Group for the year ended 31 December 2018, requests from the Bank's Management Board  in the matter of covering the retained loss resulting from the change in accounting policies in connection with the first application of IFRS 9, and of distributing the net profit of Bank Polska Kasa Opieki Spółka Akcyjna for 2018, as well as the situation of Bank Polska Kasa Opieki Spółka Akcyjna, including the assessment of internal control mechanisms, risk management and compliance, and the rationality of the Bank's policy with regards to sponsoring and charitable activities.

 

The report of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna on operations in 2018 and the results of assessments of: reports on the operations of Bank Polska Kasa Opieki S.A. and Bank Polska Kasa Opieki Spółka Akcyjna Corporate Group for 2018, financial statements of Bank Polska Kasa Opieki S.A. and Bank Polska Kasa Opieki Spółka Akcyjna Corporate Group for the year ended 31 December 2018, requests from the Bank's Management Board  in the matter of covering the retained loss resulting from the change in accounting policies in connection with the first application of IFRS 9, and of distributing the net profit of Bank Polska Kasa Opieki Spółka Akcyjna for 2018, as well as the situation of Bank Polska Kasa Opieki Spółka Akcyjna, is considered and approved by the AGM, as per section 13 (3) of the Bank's Statute. The Report was prepared in accordance with detailed provisions II.Z.10.1., II.Z.10.2 and II.Z.10.4 of 'Good Practices for Companies Traded on the Warsaw Stock Exchange', i.e. it contains an assessment of the bank's situation, including an evaluation of internal control mechanisms, risk management and compliance, and the rationality of the Bank's policy with regards to sponsoring and charitable activities.

 

 

Regarding item 13 clause 7) in the agenda

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Michał Krupiński - Chairman of the Bank's Management Board  - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Tomasz Kubiak - Deputy Chairman of the Bank's Management Board  - on the performance of his duties between 1 January and 31 December 2018.

 

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Michał Lehmann - Deputy Chairman of the Bank's Management Board  - on the performance of his duties between 1 January and 31 December 2018

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

 

§ 1.

 

Discharge is granted to Mr Marek Lusztyn - Deputy Chairman of the Bank's Management Board  - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Tomasz Styczyński - Deputy Chairman of the Bank's Management Board  - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Marek Tomczuk - Deputy Chairman of the Bank's Management Board  - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of her duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Ms Magdalena Zmitrowicz - Deputy Chairman of the Bank's Management Board  - on the performance of her duties between 1 January and 31 December 2018

 

§ 2.

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Andrzej Kopyrski - Deputy Chairman of the Bank's Management Board  - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Management Board  of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of her duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Ms Roksana Ciurysek-Gedir - Deputy Chairman of the Bank's Management Board  - on the performance of her duties between 1 January and 31 December 2018

 

§ 2.

 

This resolution comes into force on the date of its adoption

 

 

 

Regarding item 13 clause 9) in the agenda

 

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

 

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Paweł Surówka - Chairman of the Bank's Supervisory Board - on the performance of his duties between 1 January and 31 December 2018

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of her duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Ms Joanna Błaszczyk - Deputy Chairman of the Bank's Supervisory Board - on the performance of her duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Stanisław Ryszard Kaczoruk - Deputy Chairman of the Bank's Supervisory Board - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Paweł Stopczyński - Secretary of the Bank's Supervisory Board - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Grzegorz Janas - Member of the Bank's Supervisory Board - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Michał Kaszyński - Member of the Bank's Supervisory Board - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of her duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Ms Justyna Głębikowska-Michalak - Member of the Bank's Supervisory Board - on the performance of her duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of her duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Ms Sabina Bigos-Jaworowska - Member of the Bank's Supervisory Board - on the performance of her duties between 1 January and 31 December 2018.

 

§ 2.

This resolution comes into force on the date of its adoption.

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of granting discharge to a member of the Supervisory of Bank Polska Kasa Opieki Spółka Akcyjna

on the performance of his duties in 2018

 

Pursuant to section 393 (1) and section 395 (2) (3) of commercial companies' code and section 13 (4) the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1.

 

Discharge is granted to Mr Marian Majcher - Member of the Bank's Supervisory Board - on the performance of his duties between 1 January and 31 December 2018.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

Regarding item 15 in the agenda

 

Resolution no.

of the Ordinary General Meeting

of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of the division of Centralny Dom Maklerski Pekao S.A.

 

 

§ 1

1.         Pursuant to section 541 of commercial companies' code ('CCC'), a resolution is made to divide Centralny Dom Maklerski Pekao S.A. with its registered office in Warsaw ('CDM' or 'Divided Company') pursuant to section 529 (1) (1) of CCC, i.e.:

·      through the transfer of part of the property (assets and liabilities) and rights and obligations of the Divided Company to Bank Polska Kasa Opieki Spółka Akcyjna with its registered office in Warsaw ('Bank'), in the form of the organised part of CDM's business related to the provision of brokerage services, involving: (i) accepting and forwarding orders for the purchase or sale of financial instruments, (ii) fulfilling the orders referred to in item (i) on the orderer's account, (iii) purchasing or selling financial instruments on its own account, (iv) investment consulting, (v) offering financial instrument, (vi) providing services in the course of performing investment and service underwriting agreements, or entering into and performing other agreements of a similar nature, provided that financial instruments constitute their subject matter, (vii) keeping or registering financial instruments, including keeping securities accounts, derivatives accounts and omnibus accounts, and keeping cash accounts, (vii) providing consulting services for businesses with regards to capital structure, business strategy or other issues related to such structure or strategy, (ix) consulting services and other services related to mergers, divisions and acquisitions of businesses, (x) currency exchange, provided that such services are related to the activity specified in section 69 (2) of the financial instrument trading act, (xi) drawing up investment analyses, financial analyses and other recommendations of a general nature relating to transactions concerning financial instruments, (xii) providing additional services related to service or investment underwriting ('Stock Brokerage Operations'), where with regards to activity involving consulting services for businesses with regards to capital structure, business strategy or other issues related to such structure or strategy or consulting services and other services related to mergers, divisions and acquisitions of businesses (items (viii) and (ix) above, respectively), it must be noted that as of the date of signing the Division Plan (as defined below), CDM did not carry out any such activity, and as of the effective date of the Division (as defined below) it has no intention of carrying out such activity; and

·      through the transfer of part of the property of the Divided Company to Centrum Bankowości Bezpośredniej sp. z o.o. with its registered office in Kraków ('CBB'), in the form of the organised part of CDM's business related to the provision of call centre services, involving, among others: (i) ensuring the servicing of orders and instructions given by customers over the phone, (ii) providing customer service related to ongoing operations, (iii) servicing the product helpline and carrying out sales tasks, (iv) giving detailed information related to provided services, (v) contributing to budget implementation through actively selling products, and (vi) supporting sales made through distribution channels other than telephone ('Call Centre Operations'),

('Division').

2.         Approval is granted to the division plan of the Divided Company, agreed in writing between the Divided Company and the Bank and CBB on 27 February 2019, and made publicly available from 27 February 2019 and continuously onwards until the present day on the Divided Company's, Bank's and CBB's websites ('Division Plan'). The Division Plan constitutes Attachment no.1 to this resolution.

3.         In connection with the Division, consent is granted to the transfer of the organised part of CDM's business related to Stock Brokerage Operations to the bank and of the organised part of CDM's business related to Call Centre Operations to CBB, to the extent and based on the principles specified in this resolution and the Division Plan.

 

1.         As the Bank is the sole shareholder in the Divided Company, pursuant to section 550 of CCC no increase in the Bank's share capital is expected in connection with the purchase of part of CDM's assets, and conversely the Bank will not issue the Bank's shares in exchange for the acquired assets of CDM.

2.         As a result of the Division, CBB's share capital will be increased by PLN 1,000 (one thousand złoty), i.e. from the amount of PLN 500,000 (five hundred thousand złoty) to the amount of PLN 501,000 (five hundred thousand and one złoty), through emitting 2 (two) shares with a nominal value of PLN 500 (five hundred złoty) each ('New Issue Shares'). All New Issue Shares will be given to the Divided Company's existing sole shareholder, i.e. the Bank, in accordance with the adopted ratio of exchange of stocks of the Divided Company for shares in CBB, which was set as follows: one New Issue Share will correspond to 908 579 (nine hundred eight thousand five hundred seventy nine) stocks of the Divided Company.

3.         The assets of the Divided Company purchased by CBB will go to CBB's share capital and supplementary capital, in the following manner: the amount of PLN 1,000 (say: one thousand złoty) will be used to increase the share capital, while the amount equivalent to the value of the organised part of the Divided Company's business related to Call Centre Operations as at the Division Date, reduced by the amount of increase in the share capital, will go to supplementary capital.

4.         No additional contributions are envisioned in connection with the Division.

 

Consent is granted to make the following changes in CBB's Statute:

a)   § 5 (1) of CBB's Statute shall read as follows:

'The Company's share capital is PLN 501,000 (five hundred thousand and one złoty).';

b)   § 5 (2) of CBB's Statute shall read as follows:

'The Company's share capital is divided into 1002 (one thousand two) equal and indivisible shares of a nominal value of PLN 500 (five hundred złoty) each.';

c)   § 6 (2) of CBB's Statute shall read as follows:

'Shares were taken in the following manner:

a.   Jacek Styczeń, acting on behalf of Bank Przemysłowo - Handlowy Spółka Akcyjna with its registered office in Kraków - 490 (four hundred ninety) shares of a nominal value of PLN 500 (five hundred złoty) each, i.e. a total value of PLN 245,000 (two hundred forty five thousand złoty),

b.   Monika Patyra, acting on behalf of Powszechny Bank Kredytowy Spółka Akcyjna with its registered office in Warsaw - 490 (four hundred ninety) shares of a nominal value of PLN 500 (five hundred złoty) each, i.e. a total value of PLN 245,000 (two hundred forty five thousand złoty),

c.   Fritz Georg Schlumprecht, acting on behalf of HVB Direkt Gesselschaft für Direktservice und Direktvertrieb mbH München, Germany - 20 (twenty) shares of a nominal value of PLN 10,000 (ten thousand złoty),

d.   Bank Polska Kasa Opieki Spółka Akcyjna with its registered office in Warsaw took up 2 (two) shares of a nominal value of PLN 1,000 (one thousand złoty), taken up as a result of the division of Centralny Dom Maklerski Pekao S.A.';

d)   § 6 (3) of CBB's Statute shall read as follows:

'Shares in share capital referred to in subsection 2, items a to c were paid in cash.'

 

New Issue Shares in CBB granted to the Bank will entitle to a share in the profit of CBB generated in the financial year starting on 1 January of the year in which the Divided Company is struck from the register.

 

The Bank's Management Board  is authorised to take any actual and legal actions required to conclude the Division.

 

This resolution comes into force on the date of its adoption.

 

Statement of reasons for the Resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of dividing Centralny Dom Maklerski Pekao S.A.

 

The Statement of reasons for the resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of dividing Centralny Dom Maklerski Pekao S.A. is included in the Report of the Management Board  of Bank Polska Kasa Opieki S.A. with its registered seat in Warsaw, justifying the division of Centralny Dom Maklerski Pekao S.A. 

The Supervisory Board accepted the draft resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of dividing Centralny Dom Maklerski Pekao S.A.

 

 

Regarding item 16 in the agenda

 

Resolution no.

of the Ordinary General Meeting

of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of reviewing the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna in 2018

 

Pursuant to § 28 (4) of Corporate Governance Rules for Supervised Institutions in conjunction with § 13 (18) of the Bank's Statute, the Ordinary General Meeting resolves as follows:

 

§ 1

 

After considering the Report on the review of the operation of the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna, the Bank's General Meeting finds that the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna is conducive to the Bank's development and the safety of its operations.

 

§ 2.

 

This resolution comes into force on the date of its adoption.

 

Statement of reasons for the Resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of reviewing the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna in 2018

 

Pursuant to § 18 (19) of the Statute in conjunction with § 28 (4) of Corporate Governance Rules for Supervised Institutions issued by the Financial Supervision Authority, the supervising governing body prepares an annual report assessing the operation of remuneration policy in the supervised institutions. Due to the above, the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna reviewed the operation of the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna in 2018.

Pursuant to § 28 (4) of Corporate Governance Rules for Supervised Institutions, the supervisory authority must review whether the adopted remuneration policy is conducive to the supervised institution's development and the safety of its operations.

In 2018, the Bank operated a Remuneration Policy that was conducive to the Bank's development and the safety of its operations through implementing decisions and achieving goals aimed at ensuring a long-term increase in value for shareholders and the stability of the business's operations.

 

Regarding item 18 in the agenda

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of amending the Statute of Bank Polska Kasa Opieki Spółka Akcyjna

 

Pursuant to section 430 (1) of commercial companies' code and section 13 (8) the Bank's Statute, the Ordinary General Meeting resolves as follows:

§1

 

The following amendments are made to the Bank's Statute:

1)      Item 17 in § 6 (1) of the Bank' Statute shall read as follows:

'17) Providing payment services:

e)    within the scope of issuing payment instruments and execution of payment operations with the use of such instruments,

f)    as a paying agent,

g)   within the scope of initiating payment transaction and

h)    within the scope of access to account information

and performing activities connected with these services,'

 

2)      Item 20 in § 6 (1) of the Bank' Statute shall read as follows:

'20) Taking up shares or acquisition of shares and rights to vote, shares of other legal entity not being a bank or participation units and investment certificates of investment funds,'

3)      The period in item 36 of § 6 (1) of the Bank's Statute is replaced with a comma and item 37 is added, reading as follows:

'37) Performing acquisition activities for the benefit of entities offering employee capital plans and performing activities related to servicing participants of employee capital plans,'

 

4)      Item 38 is added to § 6 (1) of the Bank's Statute, reading as follows:

'38) Performing acquisition activities for the benefit of voluntary pension funds and servicing participants of voluntary pension funds,'

 

 

§2

Pursuant to section 430 (5) of commercial companies' code, the Supervisory Board is authorised to draw up a consolidated text of the amended Bank's Statute, including the authorisation of the Financial Supervision Authority referred to in §3.

§3.

This resolution comes into force on the date of its adoption, where the amendment to the Bank's Statute adopted pursuant to this resolution must be recorded in the register of businesses of the National Court Register pursuant to section 430 (1) of commercial companies' code, after receiving the Financial Supervision Authority's authorisation to make such an amendment.

 

 

 

Statement of reasons for the Resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of amending the Statute of Bank Polska Kasa Opieki Spółka Akcyjna

 

Amendments to § 6 of the Bank's Statute are aimed at providing additional detail with regards to the Bank's operations in relation to its legal, market and technological environment. They do not constitute significant changes to the Bank's operations within the meaning of section 416 of commercial companies' code.

 

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of amending the Statute of Bank Polska Kasa Opieki Spółka Akcyjna

 

Pursuant to section 430 (1) of commercial companies' code and section 13 (8) the Bank's Statute, the Ordinary General Meeting resolves as follows:

§1

 

The following amendments are made to the Bank's Statute:

1)      Item 24 in § 6 (1) of the Bank's Statute shall read as follows:

'24) Purchasing and selling real estate, as well as letting them on hire or lease,'

 

2)      Item 39 is added to § 6 (1) of the Bank's Statute, reading as follows:

 '39) Keeping stock records under the concluded contracts,'

 

3)      Item 40 is added to § 6 (1) of the Bank's Statute, reading as follows:

'40) Financial and operational participation in international projects and ventures,'

 

4)      Item 41 is added to § 6 (1) of the Bank's Statute, reading as follows:

'41) Operating an online crowdfunding platform, combining funding provided by the Bank with crowdfunding,'

 

5)      Item 42 is added to § 6 (1) of the Bank's Statute, reading as follows:

'42) Providing services to companies equity-linked to the Bank or the Bank's shareholders, including in the following areas:

a)         use of IT systems and technologies, including but not limited to the utilisation of software, IT infrastructure and data processing,

b) keeping accounting books

and financial and operational participation in projects implemented together with companies equity-linked to the Bank or the Bank's shareholders,'
 

6)      Item 43 is added to § 6 (1) of the Bank's Statute, reading as follows:

'43) Collaboration with other entities within the corporate group, in particular using free technical, organisational and human resources or IT systems, in accordance with their intended economic use and with particular attention paid to the security of the operations of the Bank and such entities,'

7)      Item 44 is added to § 6 (1) of the Bank's Statute, reading as follows:      

'44) Engaging in other economic ventures at home and abroad, individually or together with other entities, including brokerage in offering financial and non-financial services.'

 

§2

Pursuant to section 430 (5) of commercial companies' code, the Supervisory Board is authorised to draw up a consolidated text of the amended Bank's Statute, including the authorisation of the Financial Supervision Authority referred to in §3.

§3.

This resolution comes into force on the date of its adoption, where the amendment to the Bank's Statute adopted pursuant to this resolution must be recorded in the register of businesses of the National Court Register pursuant to section 430 (1) of commercial companies' code, after receiving the Financial Supervision Authority's authorisation to make such an amendment.

 

 

 

Statement of reasons for the Resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of amending the Statute of Bank Polska Kasa Opieki Spółka Akcyjna

 

Amendments to § 6 of the Bank's Statute are aimed at providing additional detail with regards to the Bank's operations in relation to its legal, market and technological environment. They do not constitute significant changes to the Bank's operations within the meaning of section 416 of commercial companies' code

 

 

Resolution no.

of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna

in the matter of amending the Statute of Bank Polska Kasa Opieki Spółka Akcyjna

 

Pursuant to section 430 (1) of commercial companies' code and section 13 (8) the Bank's Statute, the Ordinary General Meeting resolves as follows:

§1

 

The following amendments are made to the Bank's Statute:

1)      Item 17 of § 13 of the Bank's Statute shall read as follows:

'17) Selection of auditing company to audit financial statements,'

2)      Item 11 is added to § 14 (5) of the Bank's Statute, reading as follows:
'11) is not a member of the Bank's Supervisory Board for longer than 12 years.'

3)      Subsection 5a of § 14 of the Bank's Statute shall read as follows:

'5a. The majority of the members of the Supervisory Board, being the members of the Audit Committee, including its chairman, shall meet the independency conditions within the meaning of art. 129 para. 3 of the act of 11 May, 2017 on chartered auditors, auditing companies and public supervision. Members of the Supervisory Board being the members of the Audit Committee shall have the knowledge and skills in the fields of the Bank's operations, whereas the condition is considered met if at least one member of the Audit Committee has the knowledge and skills in these fields or individual members have the knowledge and skills in these fields within some specific scopes. At least one member of the Supervisory Board being the member of the Audit Committee shall have the knowledge and skills in accountancy and auditing of financial statements.'

 

4)       Item 18 in § 18 of the Bank's Statute, reading as specified below, is struck from the Statute:

'18) Approval of motions of the Management Board of the Bank related to outsourcing in strategic areas of business activity conducted by the Bank or in case of the commission of services having the value not lower than Euro 1,000,000,'

5)       Item 21 in § 18 of the Bank's Statute shall read as follows:

'21) Assessment of the intent to terminate the agreement with auditing company authorised to audit financial statements,'

6)       Item 24 in § 18 of the Bank's Statute shall read as follows:

'24) Approval of the Bank Recovery Plan or Group Recovery Plan, prepared under the regulations of the Banking Act.'

7)       Subsection 3 in § 20 of the Bank's Statute shall read as follows:

'3. The Management Board of the Bank shall operate on the basis of the Rules of procedure adopted by it. Rules of procedure shall in particular define the matters which require joint consideration by the Management Board. The Rules and Regulations shall define the principles of holding the Board's meetings, including the Board's meetings using the means of distance communication, and the principles of adopting resolutions by written procedure or by using the means of distance communication.'

8)       Subsection 4 in § 20 of the Bank's Statute shall read as follows:

'4. Resolutions of the Bank Management Board may be adopted after all members have been duly notified of the Management Board meeting. Resolutions are deemed valid when adopted at the Board of Director's meeting in the presence of at least half of the Management Board members.'

9)       Subsection 6 is added to § 20 of the Bank's Statute, reading as follows:

'6. Adopting resolutions by written procedure and by using the means of distance communication shall not apply to resolutions taken in secret voting.'

10)     § 25 shall read as follows:

'§ 25 Basic capital (funds) of the Bank include:

1) Statutory capital,

2) Obligatory reserve equity,

3) Reserve equities, including the fund for conducting brokerage activity,

4) General risk fund for unidentified risk of the bank activity,

5) Revaluation reserve,

6) Retained result from previous years,

7) Net result of the current reporting period.'

 

11)    Subsection 2 in § 26 shall read as follows:

'2. Bank shall create funds under the principles provided for in the applicable legal acts'

12)    The name of Chapter VII of the Bank's Statute shall read as follows:

         'VII. INTERNAL CONTROL AND RISK MANAGEMENT'

13)    Subsection 1 in § 38 of the Bank's Statute shall read as follows:

'1. The purpose of the system of internal Bank's control is to ensure:

5)                     efficiency and effectiveness of the Bank's activity;

6)                     credibility of financial reporting

7)                     observance of risk management principles in the Bank.

8)                     compliance of the Bank's operations with law, internal regulations and market standards.'
 

14)    Item 2 of subsection 2 in § 38 of the Bank's Statute shall read as follows:

'2) independent a compliance unit whose task is to identify, evaluate, control and monitor the risk of non-compliance of Bank's operations with law, internal regulations and market standards and to present relevant reports;'

 

15)    Subsection 5 is added to § 38 of the Bank's Statute, reading as follows:

'5. As a part of the risk management system, the Bank shall:

6)                         apply formalised principles intended to determine the amount of risk taken and the principles of risk management,

7)                         apply formalised principles intended to identification, measurement or estimation and monitoring of the risk present in the Bank's operations, taking also into account the forecasted level of risk in the future,

8)                         apply formalised risk-reducing limits as well as procedures for the event the limits are exceeded.

9)                         apply formalised system of management reporting which enables monitoring of risk level,

10)                       have organisational structure adjusted to the amount and parameters of risk incurred by the Bank.'

 

§2

Pursuant to section 430 (5) of commercial companies' code, the Supervisory Board is authorised to draw up a consolidated text of the amended Bank's Statute, including the authorisation of the Financial Supervision Authority referred to in §3.
 

§ 3.

This resolution comes into force on the date of its adoption, where the amendment to the Bank's Statute adopted pursuant to this resolution must be recorded in the register of businesses of the National Court Register pursuant to section 430 (1) of commercial companies' code, after receiving the Financial Supervision Authority's authorisation to make such an amendment.

 

 

 

 

Statement of reasons for the Resolution of the Ordinary General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna in the matter of amending the Statute of Bank Polska Kasa Opieki Spółka Akcyjna 

 

Changes to § 13 item 17, §14 subsection 5a, §18 item 21 and item 24 of the Bank's Statute area meant to ensure the Statute's conformance with applicable laws (including provisions of the accounting act and the certified auditors, auditing companies and public audit act.

 

The addition of item 11 to § 14 subsection 5 of the Bank's Statute is related to the Bank's implementation of recommendations and detailed rules found in 'Good Practices for Companies Traded on the Warsaw Stock Exchange 2016', issued by the Stock Exchange pursuant to Resolution no. 26/1413/2015 of the Supervisory Board of Giełda Papierów Wartościowych w Warszawie S.A. on 13 October 2015.

 

Revocation of § 18 item 18 of the Bank's Statute is aimed at aiding the Bank's Management Board  in the everyday management of the Bank's affairs. 

 

Amendments to § 20 (subsection 3, subsection 4 and new subsection 6) of the Bank's Statute are intended to enable the Bank's Management Board  to use means of communication at a distance.

 

Amendments to § 25 and § 26 subsection 2 of the Bank's Statute are aimed at ensuring consistency of the provisions of the Statute with the accounting policies used in the Bank and at introducing stylistic changes. The adjustments do not result in any changes to existing Bank processes.

 

Change of the title of Chapter VII and change in the content of § 38 of the Bank's Statute (subsection 1, subsection 2 item 2, and addition of new subsection 5) are aimed at ensuring consistency with provisions of the banking law act and the resolution of the Minister of Development and Finance of 6 March 2017 on the risk management system and internal control system, remuneration policy and detailed method of valuing internal capital in banks, as well as Recommendation H of the Financial Supervision Authority.

 

 

Content of the proposed amendments to the Articles of Association of Bank Pekao SA and current wording of the amended provisions

 

The amendments of the Statute proposed by the Bank's Management Board include:

 

27)     giving the current § 6 para. 1 item 17 of the Bank's Statute in the current wording:

 

"17) Providing payment services:

a) within the scope of issuing payment instruments and execution of payment operations with the use of such instruments,

b) as a paying agent

and performing activities connected these services,"

 

a new wording:

 

"17) Providing payment services:

i)     within the scope of issuing payment instruments and execution of payment operations with the use of such instruments,

j)     as a paying agent,

k)    within the scope of initiating payment transaction and

l)     within the scope of access to account information

and performing activities connected with these services,"

 

28)     giving the current § 6 para. 1 item 20 of the Bank's Statute in the current wording:

 

"20) Acquiring or purchasing shares and rights arising from shares of stock of another legal entity other than a bank, or investment in investment funds,"

 

a new wording:

 

"20) Taking up shares or acquisition of shares and rights to vote, shares of other legal entity not being a bank or participation units and investment certificates of investment funds,"

 

29)     giving the current § 6 para. 1 item 24 of the Bank's Statute in the current wording:

 

"24) Purchasing and selling real estate,"

 

a new wording:

 

"24) Purchasing and selling real estate, as well as letting them on hire or lease,"

 

30)     replacing a full stop with a comma in § 6 para. 1 item 36  of the Bank's Statute and adding a new item 37 of the wording:

 

"37) Performing acquisition activities for the benefit of entities offering employee capital plans and performing activities related to servicing participants of employee capital plans,"

 

31)     adding in § 6 para. 1 of the Bank's Statute a new item 38 of the wording:

 

"38) Performing acquisition activities for the benefit of voluntary pension funds and servicing participants of voluntary pension funds,"

 

32)     adding in § 6 para. 1 of the Bank's Statute a new item 39 of the wording:

 

"39) Keeping stock records under the concluded contracts,"

 

33)     adding in § 6 para. 1 of the Bank's Statute a new item 40 of the wording:

 

"40) Financial and operational participation in international projects and ventures,"

 

34)     adding in § 6 para. 1 of the Bank's Statute a new item 41 of the wording:

 

"41) Running online platform of social financing (crowdfunding) that combines financing granted by the Bank with social financing,"

 

35)     adding in § 6 para. 1 of the Bank's Statute a new item 42 of the wording:

 

"42) Providing services to the benefit of companies associated with the Bank or Bank's shareholders, including among others:

b)  use of information technologies and systems, including among others the use of software, IT infrastructure and data processing,

keeping accounting books

and financial and organisational participation in projects realized jointly with the capital related companies with the Bank or Bank's Shareholders,"

36)     adding in § 6 para. 1 of the Bank's Statute a new item 43 of the wording:

 

 

37)     adding in § 6 para. 1 of the Bank's Statute a new item 44 of the wording:

 

"44) Execution, independently or jointly with other entities, of other economic projects, domestically and abroad, including agency services in offering financial and non-financial services."

 

38)     giving the current § 13 item 17 of the Bank's Statute in the current wording:

 

"17) Appointment of the entity authorised to examine financial statements and review the financial statements,"

 

 a new wording:

 

"17) Selection of auditing company to audit financial statements,"

 

39)     adding in §14, para. 5 of the Bank's Statute a new item 11 in the wording:

 

"11) is not a member of the Bank's Supervisory Board for longer than 12 years."

 

40)     giving the current § 14 para. 5a of the Bank's Statute in the current wording:

 

"At least three independent members of the Supervisory Board should have competence in accounting or financial revision, including at least one of them should additionally fulfill the conditions of independence as defined in art. 86 section 5 of the act of 7 May 2009 on chartered accountants and their governing body, entities authorized to examine financial statements and on public supervision."

 

a new wording:

 

"5a. The majority of the members of the Supervisory Board, being the members of the Audit Committee, including its chairman, shall meet the independency conditions within the meaning of art. 129 para. 3 of the act of 11 May, 2017 on chartered auditors, auditing companies and public supervision. Members of the Supervisory Board being the members of the Audit Committee shall have the knowledge and skills in the fields of the Bank's operations, whereas the condition is considered met if at least one member of the Audit Committee has the knowledge and skills in these fields or individual members have the knowledge and skills in these fields within some specific scopes. At least one member of the Supervisory Board being the member of the Audit Committee shall have the knowledge and skills in accountancy and auditing of financial statements.

 

41)     deleting from § 18 of the Bank's Statute the current item18 in a wording:

 

"Approval of motions of the Management Board of the Bank related to outsourcing in strategic areas of business activity conducted by the Bank or in case of the commission of services having the value not lower than Euro 1,000,000,".

 

42)     giving the current § 18 item 21 of the Bank's Statute in the current wording:

 

"21) Performance of assessment of intention of termination of an agreement with an entity authorized to examine financial statements,"

 

a new wording:

 

"21) Assessment of the intent to terminate the agreement with auditing company authorised to audit financial statements,"

 

43)     giving the current § 18 item 24 of the Bank's Statute in the current wording:

 

"24) Approval of the recovery plan of the Bank or the recovery plan of the Bank's Capital Group prepared under the provisions of the Banking Act. "

 

a new wording:

 

"24) Approval of the Bank Recovery Plan or Group Recovery Plan, prepared under the regulations of the Banking Act."

 

44)     giving the current § 20 para. 3 of the Bank's Statute in the current wording:

 

"3. The Management Board of the Bank shall operate on the basis of the Rules of procedure adopted by it. Rules of procedure shall in particular define the matters which require joint consideration by the Management Board, as well as the procedure for adopting a resolution in writing."

 

a new wording:

 

"3. The Management Board of the Bank shall operate on the basis of the Rules of procedure adopted by it. Rules of procedure shall in particular define the matters which require joint consideration by the Management Board. The Rules and Regulations shall define the principles of holding the Board's meetings, including the Board's meetings using the means of distance communication, and the principles of adopting resolutions by written procedure or by using the means of distance communication."

 

45)     giving the current § 20 para. 4 of the Bank's Statute in the current wording:

 

"4. Resolutions of the Bank Management Board may be adopted after all members have been duly notified of the Management Board meeting. Resolutions are deemed valid when adopted in the presence of at least half of the Management Board members."

 

a new wording:

 

"4. Resolutions of the Bank Management Board may be adopted after all members have been duly notified of the Management Board meeting. Resolutions are deemed valid when adopted at the Board of Director's meeting in the presence of at least half of the Management Board members."

 

46)     adding in § 20 of the Bank's Statute a new item 6 in the wording:

 

"6. Adopting resolutions by written procedure and by using the means of distance communication shall not apply to resolutions taken in secret voting."

 

47)     giving the current § 25 of the Bank's Statute in the current wording:

 

"§ 25

1. Equity funds of the Bank, including positions decreasing them, in accordance with the regulations of Banking Law, shall consist of:

1) Basic funds,

2) Supplementary capital in the amount not higher than the basic funds of the Bank.

2. The basic funds of the Bank are:

1) Statutory capital,

2) Obligatory reserve equity,

3) Reserve equities, including the fund for conducting brokerage activity,

4) General risk fund for unidentified risk of the bank activity,

5) Retained profit from previous years,

6) Profit under approval and net profit of the current reporting period, calculated in accordance with the applicable accounting principles, minus any anticipated charges and dividends whose amounts should not exceed the amount of the net profit, as verified by expert auditors."

 

a new wording:

 

"§ 25 Basic capital (funds) of the Bank include:

1) Statutory capital,

2) Obligatory reserve equity,

3) Reserve equities, including the fund for conducting brokerage activity,

4) General risk fund for unidentified risk of the bank activity,

5) Revaluation reserve,

6) Retained result from previous years,

7) Net result of the current reporting period.

 

48)     giving the current § 26 para. 2 of the Bank's Statute in the current wording:

 

"2. Bank shall create funds provided for in binding legal acts.

 

a new wording:

 

"2. Bank shall create funds under the principles provided for in the applicable legal acts."

 

49)     giving the current title of Chapter VII of the Bank's Statute in the current wording:

 

"VII. INTERNAL CONTROL"

 

a new wording:

 

"VII. INTERNAL CONTROL AND RISK MANAGEMENT"

 

50)     giving the current § 38 para. 1 of the Bank's Statute in the current wording:

 

"1. The aim of the internal control system of the Bank is to ensure:

1) compliance of Bank's operations with law, internal regulations and market standards and with the strategy of the Bank,

2) effectiveness and efficiency of the Bank's activity,

3) protection of assets,

4) prevention of losses and errors,

5) security, stability and effectiveness of operations,

6) reliability and completeness of accounting, management information and reliability of financial reporting,

7) compliance of transactions with generally binding provisions of law, supervisory rules and internal policies, plans, regulations and procedures,

8) support of the decision-making process,

9) observance of risk management principles in the Bank."

 

a new wording:

 

"1. The purpose of the system of internal Bank's control is to ensure:

9)       efficiency and effectiveness of the Bank's activity;

10)     credibility of financial reporting

11)     observance of risk management principles in the Bank.

12)     compliance of the Bank's operations with law, internal regulations and market standards."

 

51)     giving the current § 38 para. 2 item 2 of the Bank's Statute in the current wording:

 

"2) a compliance unit whose task is to identify, evaluate, control and monitor the risk of non-compliance of Bank's operations with law, internal regulations and market standards and to present relevant reports;"

 

a new wording:

 

"2) independent a compliance unit whose task is to identify, evaluate, control and monitor the risk of non-compliance of Bank's operations with law, internal regulations and market standards and to present relevant reports;"

 

52)     adding in § 38 of the Bank's Statute a new item 5 in the wording:

 

"5. As a part of the risk management system, the Bank shall:

11)     apply formalised principles intended to determine the amount of risk taken and the principles of risk management,

12)     apply formalised principles intended to identification, measurement or estimation and monitoring of the risk present in the Bank's operations, taking also into account the forecasted level of risk in the future,

13)     apply formalised risk-reducing limits as well as procedures for the event the limits are exceeded.

14)     apply formalised system of management reporting which enables monitoring of risk level,

15)     have organisational structure adjusted to the amount and parameters of risk incurred by the Bank."

 

 

 

REPORT ON THE EVALUATION OF THE FUNCTIONING OF THE REMUNERATION POLICY AT BANK POLSKA KASA OPIEKI SPÓŁKA AKCYJNA IN 2018

 

As part of the supervision exercised, and in accordance with §18 item 19 of the Articles of Association of Bank Polska Kasa Opieki Spółka Akcyjna, the Supervisory Board assessed the functioning of the Remuneration Policy at Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter: "Remuneration Policy") in 2018.

 

The Supervisory Board assessed positively the continuation by the Bank of a balanced approach to total remuneration, which ensures, in particular, the market level of fixed elements of remuneration, and the possibility of acquiring rights to variable elements of remuneration as part of incentive schemes. The payment of the variable elements of remuneration depended on the results and took into account the Bank's risk. Guided by the principle of having a flexible policy of the variable elements of remuneration, the Bank applied incentive systems ensuring the long-term increase of value of shareholders and stability of the Bank's operations.

 

Employees covered by the Corporate Collective Labour Agreement were paid incentive bonuses for special achievements at work and the results obtained by the Bank, and, based on the Bank's results audited after each quarter, the quarterly bonus was calculated and paid. Employees covered by the Management by Objectives System received a settlement of their individual objectives and the annual bonus depending on the results achieved, and additionally, for sales employees, a quarterly settlement and advance payment depending on the implementation of the individual annual objectives divided into quarters were introduced.

 

Guidance on how to assess the compliance of the implementation of objectives and tasks by employees in terms of compliance with the generally applicable law and the Bank's internal regulations, the requirements and recommendations of the supervisory bodies, and the standards of conduct adopted by the Bank, including the assessment of satisfaction and quality of customer service, was introduced. The guidelines introduced were aimed at mitigating the risk of rewarding inappropriate employee attitudes and maintaining consistency of the assessment.

 

As part of the Variable Remuneration System for the Management Staff covering the Bank's employees and having a significant impact on the Bank's risk profile, the settlement of the 2017 objectives was made and the advance instalments and deferred instalments of the variable remuneration were granted and settled, in accordance with the applicable Principles of the Variable Remuneration System. The assessment of the results of work took place at the individual level, at the level of the organizational units and based on the Bank's results, while maintaining the Bank's 3-year business cycle and the risk associated with the conducted operations. The payment amounts were determined based on the assessment of the achievement of individual objectives in the current year, and on the assessment of the compliance of the conduct with the law, the Bank's internal regulations and the standards of conduct adopted by the Bank. The compliance assessment carried out did not reveal any infringements.

 

In 2018, the Supervisory Board adopted, by way of a resolution, the Principles of the Variable Remuneration System, which covered the Members of the Bank's Management Board, and put into practice the provisions of the resolution of the Ordinary General Meeting of the Bank regarding the principles of determining the remunerations of the Members of the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna.

 

Taking into account the business strategy, building of the Bank's brand as an Employer responsible for the development and involvement of employees, the Bank's Management Board continued talks with the trade union organizations aimed at introducing changes to the Corporate Collective Labour Agreement. The proposed changes concerned, in particular, the remuneration system, including the principles of awarding bonuses and rewarding employees based on transparent, objective and fair criteria, while respecting the law and caring for the quality of service and customer satisfaction.

 

The Internal Audit Department reviewed the implementation of the remuneration policy, with a particular emphasis on the variable elements of remuneration. The report on this review was presented to the Supervisory Board and the Nomination and Remuneration Committee. The general assessment of the results of this review in December 2018 was satisfactory, the adopted solutions were assessed as compliant with the requirements of law and supporting the correct and effective risk management, implementing the Bank's management strategy and limiting the conflict of interest.

 

The Supervisory Board assesses that in 2018 the Remuneration Policy was implemented by the Bank in accordance with its assumptions, as part of the remuneration shaping processes, where the Bank followed the principle of paying adequate remuneration for lasting results. The remuneration system is compliant with the provisions of the generally applicable law and consistent with the Bank's principles of ethical conduct and the Bank's values. The Bank's Management Board strives to introduce changes to the remuneration principles, together with its social partners, which will reflect even better the adopted business strategy.

 

The Supervisory Board considered that the Remuneration Policy implemented in 2018 was aimed at ensuring the long-term growth of the value of shareholders and the stability of the enterprise's operation, and was consistent with its provisions and objectives. The development and security of the Bank is ensured through the existence of incentive systems that pursue objectives consistent with the interests of customers, shareholders and employees, and through providing an adequate level of control, both during the implementation of the individual actions under the Remuneration Policy, and control of the system solutions.

 

The Supervisory Board assesses positively the functioning of the Remuneration Policy in 2018.

 

 

 

REPORT ON THE EVALUATION OF THE FUNCTIONING OF THE REMUNERATION POLICY AT BANK POLSKA KASA OPIEKI SPÓŁKA AKCYJNA IN 2018

 

 

Report of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna on its activity in 2018 and on the results of assessment of the following: reports on the activity of Bank Polska Kasa Opieki Spółka Akcyjna and of the Bank Polska Kasa Opieki Spółka Akcyjna Capital Group for the year 2018, financial statements of Bank Polska Kasa Opieki Spółka Akcyjna and of the Bank Polska Kasa Opieki Spółka Akcyjna Capital Group for the period ended on 31 December 2018, motions of the Management Board of the Bank on covering the undistributed loss from previous years, created as a result of changes to accounting principles resulting from the application, for the very first time, of the International Financial Reporting Standard No. 9, on distributing the net profit of Bank Polska Kasa Opieki Spółka Akcyjna for the year 2018, and on the position of Bank Kasa Opieki Spółka Akcyjna, taking into account the assessment of the internal control, risk management and compliance systems, internal audit functions, as well as rationality of the Bank's policy concerning sponsorship and charitable activities.

 

I. Composition and organization of work of the Supervisory Board in 2018.

From 1 January 2018 and 31 December 2018, the following were the members of the Supervisory Board:

Paweł Surówka - Chairman of the Supervisory Board,

Joanna Błaszczyk - Deputy Chairman of the Supervisory Board,

Stanisław Ryszard Kaczoruk - Deputy Chairman of the Supervisory Board,

Paweł Stopczyński - Secretary of the Supervisory Board,

Sabina Bigos-Jaworowska - Member of the Supervisory Board,

Justyna Głębikowska-Michalak - Member of the Supervisory Board,

Grzegorz Janas - Member of the Supervisory Board,

Michał Kaszyński - Member of the Supervisory Board,

Marian Majcher - Member of the Supervisory Board.

Five Members of the Supervisory Board, i.e.: Stanisław Ryszard Kaczoruk, Sabina Bigos-Jaworowska, Justyna Głębikowska-Michalak, Michał Kaszyński and Marian Majcher meet the criterion of independence.

 

The Supervisory Board was exercising continuous supervision over the activities of the Bank, in accordance with its rights and obligations set forth in the Code of Commercial Companies and in the Bank's Statute, and in accordance with the corporate governance rules and applicable good practices.

10 Supervisory Board meetings were held in 2018. The Supervisory Board examined 145 notifications, analyses and motions and passed 107 resolutions.

 

The following Supervisory Board committees operated in 2018: (i) Audit Committee, (ii) Nomination and Remuneration Committee (iii) and Risk Committee. Reports on the activity of those committees, approved by the Supervisory Board, are attached hereto.

 

II. Personnel-related issues

From 1 January 2018 and 30 November 2018, the following were the members of the Management Board:

Michał Krupiński - President of the Bank's Management Board,

Roksana Ciurysek-Gedir - Vice President of the Bank's Management Board,

Andrzej Kopyrski - Vice President of the Bank's Management Board,

Tomasz Kubiak - Vice President of the Bank's Management Board,

Michał Lehmann - Vice President of the Bank's Management Board,

Marek Lusztyn - Vice President of the Bank's Management Board,

Tomasz Styczyński - Vice President of the Bank's Management Board,

Marek Tomczuk - Vice President of the Bank's Management Board.

On 19 November 2018 Ms. Roksana Ciurysek-Gedir and Mr. Andrzej Kopyrski tendered their resignations from the position of Vice Presidents of the Bank's Management Board, with the said resignations becoming effective on 30 November 2018.

On 19 November 2018, acting pursuant to Article 368 § 4, in conjunction with Article 369 § 1 of the Code of Commercial Companies, and with the compliance with suitability criteria taken into consideration, the Supervisory Board unanimously appointed the following persons as members of the Bank's Management Board, for a three-year shared term in office commencing on the day following the date of the General Meeting of the Bank's Shareholders approving the financial statements of the Bank for the financial year of 2018:

Michał Krupiński for the position of the President of the Bank's Management Board,

Marek Lusztyn for the position of the Vice President of the Bank's Management Board in charge of managing the risk that is significant for the Bank's activity,

Tomasz Kubiak for the position of the Vice President of the Bank's Management Board,

Michał Lehmann for the position of the Vice President of the Bank's Management Board,

Tomasz Styczyński for the position of the Vice President of the Bank's Management Board,

Marek Tomczuk for the position of the Vice President of the Bank's Management Board.

On 23 November 2018, with the suitability assessment taken into consideration, the Bank's Management Board appointed Ms. Magdalena Zmitrowicz as a Member of the Bank's Management Board, with the said appointment becoming effective on 1 December 2018, for the current, shared term in office, and entrusted her with the performance of duties of the Vice President of the Bank's Management Board.

From 1 December 2018 to 31 December 2018, the following were the members of the Management Board:

Michał Krupiński - President of the Bank's Management Board,

Tomasz Kubiak - Vice President of the Bank's Management Board,

Michał Lehmann - Vice President of the Bank's Management Board,

Marek Lusztyn - Vice President of the Bank's Management Board,

Tomasz Styczyński - Vice President of the Bank's Management Board,

Marek Tomczuk - Vice President of the Bank's Management Board,

Magdalena Zmitrowicz - Vice President of the Bank's Management Board.

 

III. Primary activities of the Supervisory Board.

Just like it was the case in previous years, the activity of the Supervisory Board in 2018 focused both on strategic issues and on those related to exercising supervision over the on-going operations of the Bank.

 

The strategic issues that the Supervisory Board was dealing with included, first and foremost, the following: approval of the internal procedure concerned with "Strategic Planning, Budgeting, Forecasting and Monitoring Financial Plans at Bank Pekao S.A.", issuing a positive opinion on the distribution of the Bank's profit for 2017 and positive assessment of the application of the Bank's Management Board on determining the general directions for the distribution of the Bank's profits for the years 2018-2020, approval of the "Multiannual Capital Management Strategy 2018 - 2020",

"Credit Risk Policy and Strategy of Bank Pekao S.A. for 2018", "Investment and Market Risk Policy for 2018", "Information Policy of Bank Pekao S.A. Related to Capital Adequacy", as well as "Bancassurance Policy of Bank Polska Kasa Opieki Spółka Akcyjna". In addition, the Supervisory Board approved the "Financing Plan for 2018 - 2020", the "Group Recovery Plan for the Bank Pekao S.A. Capital Group" and the updated "Individual Recovery Plan for Bank Pekao S.A.".

In its discussions with the Management Board, the Supervisory Board focused on the macroeconomic outlook for Poland, the Bank's investor relations, activity of the Bank's subsidiaries and analyses concerned with development of the Bank's business, with non-organic growth included as well.

The following were also analyzed by the Supervisory Board on a regular basis: (i) financial standing, (ii) sales results concerning key products, (iii) quality of assets and (iv) risk levels.

 

The Supervisory Board supervised the process of managing risk at the Bank. It conducted an in-depth analysis of quarterly reports concerned with the following: managing financial risk, controlling operational risk, credit portfolio and debt recovery operations.

 

The Supervisory Board issued its opinion on the financial statements of Bank Pekao S.A. and the Bank Pekao S.A. Capital Group, as well as on the reports on the activities of the Bank Pekao S.A. Capital Group, drawn up in accordance with the International Financial Reporting Standards approved by the European Union.

 

On 21 June 2018 the Supervisory Board submitted, to the Ordinary Meeting of Shareholders, a proposal to appoint KPMG Audyt Spółka z ograniczoną odpowiedzialnością spółka komandytowa as the audit company authorized to conduct the statutory audit and review of the financial statements of Bank Pekao S.A. and the consolidated financial statements of the Bank Pekao S.A. Capital Group for the years 2018-2020. The Supervisory Board paid a lot of attention to internal operation functions. In particular, the Supervisory Board approved amendments to the 2018 Annual Audit Plan and acknowledged the report on the activity of the Internal Audit Department in 2017.

The Supervisory Board approved results of the review of the Bank's internal control system performed in 2017.

 

While exercising supervision over effective management of the risk of non-compliance, the Supervisory Board became acquainted with the annual report on the activities of the Compliance Department in 2017, approved the Plan of Activities of the Compliance Department for 2019 and analyzed periodic bancassurance risk analyses.

 

In 2018, the Supervisory Board became familiar with the report on the legal compliance supervision system in place at the Pekao Brokerage House in 2017 and with the report on the provision of brokerage services by the Bank in 2017, in relation to the "Guidelines on the provision of brokerage services on the OTC derivatives market" issued by the Polish Financial Supervision Authority.

The Supervisory Board issued a positive opinion on the application, by the Bank, in 2017, of the Corporate Governance Principles for Supervised Institutions, issued by the Polish Financial Supervision Authority, and on the manner in which the Bank fulfills its information obligations related to the application of the corporate governance principles set forth in the Stock Exchange Regulations.

The issues that were analyzed by the Supervisory Board included also remuneration policy and suitability assessment. The Supervisory Board approved the "Policy for the Assessment of Suitability of the Proposed and Appointed Management Board Members, Supervisory Board Members and Key Function Holders at Bank Polska Kasa Opieki Spółka Akcyjna", issued a positive opinion on the application of the "Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna in 2017", and approved the "Report on the application of the Remuneration Policy at Bank Polska Kasa Opieki Spółka Akcyjna in 2017".

The Supervisory Board was also interested in the "Voluntary Resignation Program for Employees of Bank Pekao S.A."

 

Within the scope of its statutory competence, the Supervisory Board assessed and approved motions and reports submitted by the Bank's Management Board to the Ordinary Meeting of Shareholders and pertaining to the financial year 2017.

 

The Supervisory Board appointed a new member of the Nominations and Remuneration Committee.

IV. Assessment of reports of the Bank's Management Board on the activities of the Bank and of the Capital Group for the year 2018, as well as of the financial statements of the Bank and of the Capital Group for 2018, as well as of the motions of the Management Board of the Bank on covering the undistributed loss from previous years, created as a result of changes to accounting principles resulting from the application, for the very first time, of the International Financial Reporting Standard No. 9, and on distributing the net profit for the year 2018.

 

Acting pursuant to Article 382 § 3 of the Code of Commercial Companies and fulfilling its statutory duties, the Supervisory Board of Bank Pekao S.A. assessed the Management Board's reports on the activities of the Bank and of the Capital Group in 2018, as well as the financial statements of the Bank and of the Capital Group for 2018, in terms of their consistency with the books, documents and the factual state.

 

As a result of this assessment, and having become acquainted with the report of the independent certified auditor on the review of the financial statements of Bank Polska Kasa Opieki Spółka Akcyjna and of the consolidated statements of the Bank Polska Kasa Opieki Spółka Akcyjna Capital Group for the year 2018, the Supervisory Board issues its positive opinion on the achieved results, and recommends the General Meeting of Shareholders to pass resolutions approving these statements.

When formulating the aforementioned recommendation, the Supervisory Board took into consideration the following:

1) The Bank's 2018 activities focused on continued, sustainable growth in all areas, on effective strengthening of its good position on the retail banking market, and of its leader position in the corporate banking domain.

In 2018, the Bank generated a net profit of PLN 2,310.6 million, which was by PLN 222.5 million, i.e. 10.7% higher than the net profit generated in 2017.

 

The net profit of the Bank Pekao S.A. Capital Group attributable to the Bank's equity holders equaled PLN 2,287.2 in 2018 and was by PLN 187.9 million, i.e. 7.6% lower than the result reported for 2017.

The interest income was by 9.6% higher YoY in the Bank and by 7.8% higher YoY in the Capital Group, mainly thanks to the higher volumes of loans and deposits alike. Higher margin and higher dividend revenues.

 

The Group's non-interest income achieved in 2018 was by 1.7% higher YoY, while for the Bank it was by 5.7% lower YoY. The result on fees on commissions (including commission resulting from margins on foreign exchange transactions with customer) was by 4.7% higher YoY in the Group and by 2.6% lower YoY in the Bank, compared to 2017.

Costs of the operating activity of the Bank and of the Group in 2018 were higher, by 3.1% YoY and 5.5% YoY, respectively, due to higher personnel costs (mainly to the amount of approximately PLN 50 million related to the Voluntary Resignation Program that could be taken advantage of by

employees eligible to retirement in 2018) and other administration costs (mainly those related to marketing).

2) Return on Equity amounted to 10.7% and 10.2% for the Bank and for the Group, respectively.

3) Thanks to the effective commercial activity of the Bank and the Group in 2018, a significant growth in loan volumes was reported both in the area of retail loans (by 10.6% YoY for the Bank and 10.5% YoY for the Group). Such a substantial increase in lending was largely financed by higher volumes of retail deposits growing by 11.9% YoY in the Bank and 11.8% YoY in the Group.

4) The solid liquidity structure of the Bank and of the Group is reflected by the net loans-to-deposits ratio which equaled, at the end of December 2018, 86.7% and 89.5%, respectively. This, in conjunction with the high value of capitals, allows continued and stable growth of the Bank's and the Group's operations. The total capital ratio (TCR) for the Bank amounted to 18.7% at the end of December 2018 and was higher (by 0.3 p.p.) than at the end of 2017. The total capital ratio (TCR) for the Group equaled 17.4% at the end of December 2018 and was higher (by 0.3 p.p.) then at the end of December 2017.

5) Bank Pekao S.A. was consistently implementing the strategy of strengthening its position on the market of financing housing and consumer goods. In 2018, the Bank sold nearly PLN 10 billion worth of mortgage loans, which is a record-high result and which has translated into a 12% (YoY) increase in the value of PLN-denominated mortgage loans. The market share in new sales equaled nearly 19%. This exceptional result was also boosted by the sale of loans granted under the government's "Apartment for the Young" (Mieszkanie dla Młodych - MdM) program supporting those under the age of 35 in the acquisition of their first, new apartment. The MdM Program was discontinued at the end of 2018. During the term in which it was available, Bank Pekao S.A. extended over 41,000 loans for the total value of nearly PLN 7.3 billion. In 2018 the value of cash loans for private customers increased by 16% YoY. Sale of cash loans was boosted by the competitive Express Loan (Pożyczka Ekspresowa) offering, individual loans based on CRM tools, and effective use of electronic sale channels: PeoPay mobile banking app and Pekao24 online banking system.

6) In line with the strategy it has adopted, Bank Pekao S.A. remains the Bank of first choice for corporate customers, rendering both a comprehensive range of services offered by a universal bank, and all other financial services available in Poland (including leasing, factoring and investment consulting, inter alia in relation to mergers and acquisitions). Every other big corporation in Poland is currently taking advantage of the Bank's services. The Corporate Banking, Markets and Investment Banking Division currently serves approximately 13,000 entities, including approximately 2,500 foreign customers and over 2,500 local government entities and municipal companies. The Bank maintains its position of the leading corporate bank a leader of innovative product solutions targeted for businesses and institutions. The broad product offering, innovative solutions and a customized approach allow it to provide a comprehensive range of services for businesses, institutions and public sector entities.

7) Bank Pekao S.A. is a universal bank offering all financial services that are available in Poland to private and institutional customers. The broad product offering, innovative solutions and a customized approach allow it to provide a comprehensive range of services for customers, and the customer service model relied upon guarantees the highest quality of that service and ensures that they are always suited to their changing needs. Since 2017 Bank Pekao S.A. has been a part of the PZU S.A. Capital Group - the largest financial institution in Central and Eastern Europe.

8) Pursuant to the "Strength of the Polish Bison" (Siła Polskiego Żubra) strategy adopted for 2018-2020, the Bank intends to continue activities aiming to attain the positions of a profitability leader by building lasting business relationships and improving its operational efficiency. The following

shall remain the Bank's strategic priorities for 2019: smart growth, building long-term customer relations based on an integrated service model, operational transformation designed to strengthen its position of the best recognized bank in Poland, thanks to a professional approach creating value for customers.

Assessment of the motions of the Management Board of the Bank on covering the undistributed loss from previous years, created as a result of changes to accounting principles resulting from the application, for the very first time, of the International Financial Reporting Standard No. 9, and on distributing the net profit for the year 2018

The Supervisory Board of Bank Pekao S.A. assessed the motions of the Bank's Management Board on distributing the net profit generated by Bank Pekao S.A. in 2018 and on the proposed method of covering the undistributed loss from the previous years.

The Supervisory Board issued a positive opinion on the motion to distribute the net profit of Bank Pekao S.A. generated in 2018, taking into consideration the following factors:

1) strong capital standing of the Bank; the Common Equity Tier 1 capital ratio for the Bank Pekao S.A. Group equaled, in December 2018, without the 2018 net profit included, 15.8% (Tier 1 for the Bank equaled 17.0%). The Group's buffer by which the minimum Tier 1 requirements of the Polish Financial Supervision Authority are exceeded equals 4.4 pp. Furthermore, stress tests conducted by the European Banking Authority confirmed that the Bank is immune to the materialization of stress conditions. Such a strong capital standing ensures the safe position of the Bank even if the market becomes volatile, and allows it to pursue its growth plans,

2) fulfillment of the criteria and recommendations of the Office of the Financial Supervision Authority regarding profit distribution terms and restrictions,

3) low exposure to mortgage loans denominated in CHF,

4) compliance with the Financial Plan and the Capital Management Strategy for 2019.

Considering the above, the Supervisory Board decided to recommend the General Meeting to adopt a resolution on the distribution of net profit of Bank Polska Kasa Opieki Spółka Akcyjna for 2018 in the amount of PLN 2.310.599.572,17 in accordance with the motion of the Management Board, i.e.:

1) to allocate the amount of PLN 1,732,302,224.40 to dividend,

2) to allocated the amount of PLN 578,297,347.77 to reserve capital.

According to the above-mentioned recommendation, the payment of cash dividend shall amount to PLN 6.60 per share, which translates into a payout ratio of 75.0% of the Bank's net profit for 2018.

A the same time the Supervisory Board issued a positive opinion on the motion of the Bank's Management Board related to covering, fully by relaying on the Bank's reserve capital, the undistributed loss from previous years amounting to PLN 936,747,994.04, created as a result of changes to accounting principles resulting from the application, for the very first time, of the International Financial Reporting Standard No. 9 ("Financial Instruments"), and decided to recommend the General Meeting of Shareholders to adopt a resolution concerning this issue, in line with the motion of the Bank's Management Board.

Assessment of internal control, risk management and compliance systems, as well as internal audit functions

In accordance with the 2016 Code of Best Practices for WSE Listed Companies, the Supervisory Board drew up and presented to the Ordinary General Meeting of Shareholders an assessment of the

Bank's standing in 2017, with evaluation of internal control, risk management and compliance systems, as well as internal audit functions taken into consideration. The document containing the assessment has been attached hereto.

Assessment of the Bank's policy concerning sponsorship and charitable activities

The Supervisory Board has drawn up and presents to the Ordinary General Meeting of Shareholders the assessment of rationality of the Bank's policy concerning sponsorship and charitable activities.

The primary objectives of the sponsoring activity of Bank Pekao S.A. include the following: building the image of the Bank as a leading financial institution in terms of CSR-related activities, i.e. an institution that is in close touch with its customers and with the communities in which it is active, distinguishing the Bank's brand against the brands of its market competitors, promoting awareness of the Bank and its products among the public, evoking positive associations between a given event and the Bank, forming and strengthening positive opinions about the Bank and its products, as well as providing the Bank's business Divisions with a reliable promotional platform enabling them to conduct promotional activities and to build strong and positive relations with the Bank's customers. The policy pursued by the Bank in this area is governed by internal regulations, i.e. an Ordinance of the President of the Bank's Management Board that defines the rules, procedures and competences related to granting donations and to sponsorship schemes in which Bank Polska Kasa Opieki Spółka Akcyjna participates.

In its sponsoring and charitable activity, the Bank supports selected organizations and institutions pursuing various types of projects in the following areas:

1) education and upbringing of children and youths,

2) scientific and research undertakings, as well as didactic undertakings of scientific institutions and schools,

3) popularizing knowledge about banking,

4) providing assistance to the ill and the disabled,

5) promoting physical education and sports,

6) protecting the environment,

7) pursuing projects and activities of charitable organizations,

8) promoting culture.

Due to the organizational changes commenced with the structures of the Foundation, no new initiatives were taken in 2018. Instead, previously assumed obligations were fulfilled, with funds earmarked, inter alia, for scholarships for talented students from poor families.

Before a donation is granted or a sponsoring agreement is concluded, the Bank assesses the risks involved (due diligence) in accordance with anti-corruption and conflict of interest prevention regulations in place at the Bank.

The Supervisory Board's opinion about the Bank's policy concerning sponsoring and charitable activities is positive.

Self-assessment of the Supervisory Board's work

Acting in accordance with its rights and obligations set forth in the Code of Commercial Companies, Banking Law, recommendations of the Polish Financial Supervision Authority, the Code of Best

Practices for WSE Listed Companies and the Bank's Statute, the Supervisory Board exercised, in 2018, permanent supervision over the activities of the Bank.

The good financial results of the Bank achieved in 2018, its position in the Polish banking sector, adequate capital management and effective risk management should be considered as stemming, inter alia, from proper and effective operation of the Supervisory Board and from proper fulfilment of the tasks and obligations it has been entrusted with.

With the information presented above taken into consideration, one may assess the activity of the Supervisory Board in 2018 as effective, professional and performed in accordance with the best practices.

Summary

While assessing the activities of the Bank's Management Board, the Supervisory Board took into consideration, inter alia, the following:

(i) good financial results, (ii) effective cost management, (iii) efficient and consistent risk management, (iv) strong capital and liquidity base, (v) high level of the Bank's security, (vi) efficient internal control system and (vii) operational effectiveness.

In the opinion of the Supervisory Board, Bank Pekao S.A. enjoys a strong capital and liquidity structure, as well as exhibits the highest risk management standards and strives to continue improving its cost effectiveness. This allows the Bank to effectively pursue its strategic objectives set forth in the Bank's 2018-2020 "Strength of the Polish Bison" (Siła Polskiego Żubra) strategy, and to achieve the position of the profitability leader in the Polish banking sector by entering a path of smart growth, with its business model based on high effectiveness and quality of its processes.

With the above taken into consideration, the Supervisory Board recommends the General Meeting of Shareholders to approve, pursuant to Article 395 § 2(3) of the Code of Commercial Companies, the performance of duties, in 2018, of the following Members of the Bank's Management Board: Michał Krupiński, Tomasz Kubiak, Michał Lehmann, Marek Lusztyn, Tomasz Styczyński, Marek Tomczuk for the period between 1 January 2018 and 31 December 2018, Roksana Ciurysek-Gedir and Andrzej Kopyrski for the period between 1 January 2018 and 30 November 2018, and Magdalena Zmitrowicz for the period between 1 December 2018 and 31 December 2018.

With the 2018 activities described above taken into consideration, the Supervisory Board recommends the General Meeting of Shareholders to approve, pursuant to Article 395 § 2(3) of the Code of Commercial Companies, the performance of duties, in 2018, of the following Supervisory Board Members: Paweł Surówka, Joanna Błaszczyk, Stanisław Ryszard Kaczoruk, Paweł Stopczyński, Sabina Bigos-Jaworowska, Justyna Głębikowska-Michalak, Grzegorz Janas, Michał Kaszyński, Marian Majcher for the period between 1 January 2018 and 31 December 2018.

Report on the activity of the Audit Committee in 2018

Members of the Audit Committee

The Audit Committee is made up of 3 (three) to 5 (five) members selected from Supervisory Board members. At least one Audit committee Member shall have accounting or financial statement auditing-related knowledge and skills. The majority of Audit Committee Members, including its Chairperson, shall be independent from the Bank within the meaning of Article 129(3) of the Act on certified auditors, audit companies and public supervision. Audit Committee members shall have knowledge and skills related to the area in which the Bank operates. This condition shall be deemed fulfilled if at least one Audit Committee member possesses knowledge and skills related to that area, or if at least the individual members possess the knowledge and skills related that area in relation to their respective scopes of responsibility.

From 1 January 2018 to 31 December 2018 the Audit Committee was made up of the following members:

Justyna Głębikowska-Michalak - Chairwoman of the Committee,

Joanna Błaszczyk - Member of the Committee,

Grzegorz Janas - Member of the Committee,

Sabina Bigos-Jaworowska - Member of the Committee,

Michał Kaszyński - Member of the Committee.

Ms. J. Głębikowska-Michalak, Ms. S. Bigos-Jaworowska and Mr. M. Kaszyński meet the criteria of independence.

The make-up of the Audit Committee fulfilled, in 2018, the requirements set forth in the Act on certified auditors, audit companies and public supervision dated 11 May 2017.

Duties of the Audit Committee

No changes have been introduced to the scope of duties of the Audit Committee. The Audit Committee supports the Supervisory Board in the fulfillment of its obligations, inter alia those related to controlling and monitoring the following processes: financial reporting, effectiveness of internal control and risk management systems, as well as internal audit functions, performance of financial revision functions, independence of the certified auditor and of the audit company, efficiency of the legal and regulatory compliance monitoring system.

Meetings of the Audit Committee are held on the as-needed basis, but in no case less frequently than four times per year, on the dates that are crucial for key quarterly periods in the Bank's reporting cycle and in accordance with the annual audit plan submitted by the Internal Audit Department Director.

Meetings of the Audit Committee are attended, on a customary basis, by the President of the Bank's Management Board. All meetings of the Audit Committee are attended by directors of the following Departments: Internal Audit, Legal and Compliance, as well as by other Management members whose functions are related to the agenda of the meeting.

To ensure that the Committee operates in a transparent and unbiased manner, the Chairwoman of the Audit Committee, Ms. J.Głębikowska-Michalak held one-on-one meetings with the Internal Audit Department Director and the Compliance Department Director, without any other members of the Bank's management being in attendance. The Audit Committee has met the key certified auditor from KPMG Audyt Sp. z o.o. sp.k., without members of the Bank's Management Board being in attendance. Representatives of KPMG Audyt Sp. z o.o. sp.k. confirmed their independence from the Bank and from its subsidiaries, i.e. their fulfillment of the requirements set forth in Articles 69-73 of the Act on certified auditors, audit companies and public supervision of 11 May 2017.

Furthermore, the Chairwoman of the Audit Committee Ms. J.Głębikowska-Michalak held an individual meeting with PwC, devoted to an independent audit, to satisfy the requirement of performing an external assessment of compliance of internal audit functions with recommendation H of the Financial Supervision Authority and with the International Standards of Internal Audit Professional Practice.

On 21 June 2018 a resolution of the General Meeting of Shareholders on the principles applied while calculating the remuneration of the members of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna entered into force, amending, inter alia, the remuneration of the chairpersons of the Committees operating within the structures of the Supervisory Board.

External Auditor

On 9 May 2018 the Audit Committee approved the report on the tender procedure under which the services of a certified auditor and a review of the Bank's financial statements and the consolidated statements of the Bank's Capital Group were sought, and decided to recommend the Supervisory Board to select the audit company to conduct the statutory audit of the Bank's financial statements and the consolidated statements of the Bank's Capital Group for the years 2018 - 2020, from among the following audit companies: KPMG Audyt Sp. z o.o. sp.k. and Mazars Audyt Sp. z o.o.

The outcome preferred by the Audit Committee was to award the contract to KPMG Audyt Sp. z o.o. sp.k. ("KPMG"), i.e. a company that has submitted the best-priced bid for the audit and review of the financial statements of the Bank and the consolidated statements of the Bank's Capital Group for 2018-2020. The said bid has also received the highest merit-related score.

On 21 June 2018 the General Meeting of the Bank's Shareholders appointed KPMG as the audit company to audit and review the financial statements of Bank Polska Kasa Opieki Spółka Akcyjna and the consolidated statements of the Bank Polska Kasa Opieki Spółka Akcyjna Capital Group for 2018-2020.

Meetings of the Audit Committee

In 2018, the Audit Committee met 8 times (21 February, 26 February, 9 May, 23 July, 2 August, 7 August, 6 November and 20 December).

The Audit Committee members who attended the individual meetings are listed below:

Date Members participating in the meeting

21 February J.Głębikowska-Michalak, S.Bigos-Jaworowska, J.Błaszczyk, M.Kaszyński

26 February J.Głębikowska-Michalak, S.Bigos-Jaworowska, J.Błaszczyk, M.Kaszyński

9 May J.Głębikowska-Michalak, S.Bigos-Jaworowska, J.Błaszczyk, G.Janas, M.Kaszyński

23 July J.Głębikowska-Michalak, S.Bigos-Jaworowska, J.Błaszczyk, G.Janas, M.Kaszyński

2 August J.Głębikowska-Michalak, J.Błaszczyk, G.Janas

7 August J.Głębikowska-Michalak, J.Błaszczyk, M.Kaszyński

6 November J.Głębikowska-Michalak, J.Błaszczyk, G.Janas

20 December J.Głębikowska-Michalak, J.Błaszczyk, G.Janas

Key activities of the Audit Committee performed in 2018

The Committee reviewed and discussed the following information with members of the Management Board of the Bank and with Directors of Internal Audit Department, Legal and Compliance Department and with the External Auditor, as required:

- audited financial statements of Bank Pekao S.A. and of the Pekao S.A. Capital Group for the year 2017; the Committee issued a positive opinion thereon;

- quarterly and semi-annual financial statements; the Committee issued a positive opinion thereon;

- plan of reviews of the financial statements of Bank Pekao S.A. and of the Bank Pekao S.A. Capital Group; the Committee acknowledged the information it has been provided with;

- summary of the results of the review of the financial statements of the Bank and of the Bank Pekao S.A. Capital Group for the period between 1 January 2018 and 30 June 2018; the Committee acknowledged the information it has been provided with;

- plan of and approach to review of the financial statements of Bank Pekao S.A. and of the Capital Group for the financial year ended on 31 December 2018; the Committee acknowledged the information it has been provided with;

- analysis of the amended Accounting Policy of the Bank, in connection with entry into force of IFRS 9 "Financial Instruments", and with the impact of IFRS 9; the Committee acknowledged the information it has been provided with;

- information on the status of the tender procedure concerned with the selection of the audit company to review the audit of the financial statement of the Bank for 2018 - 2020. The Committee acknowledged the information it has been provided with;

- information on the work of the Committee tasked with selection of an audit company to audit the Bank's financial statements for the years 2018 - 2020, along with approval of the report on the tender procedure conducted, and with issuing recommendations for the Supervisory Board; the Audit Committee approved the report on the tender procedure concerned with reviewing and auditing the financial statements of the Bank and the consolidated financial statements of the Bank's Capital Group, and has decided to recommend the Supervisory Board to select, for the purpose of conducting a statutory audit of the financial statements of the Bank and of the consolidated financial statements of the Bank's Capital Group for 2018 - 2020, one of the following audit companies: KPMG Audyt Sp. z o.o. sp.k. and Mazars Audyt Sp. z o.o.

The outcome preferred by the Audit Committee was to award the contract to KPMG Audyt Sp. z o.o. sp.k. ("KPMG"), i.e. a company that has submitted the best-priced bid for the audit and review of the financial statements of the Bank and the consolidated statements of the Bank's Capital Group for 2018-2020. The said bid has also received the highest merit-related score.

- review of the Financial Division's HR resources; the Committee acknowledged the information it has been provided with;

- information on civil litigation with the participation of the Bank, in Q3 2017, in 2017, in Q1 2018, in the 1st half of 2018 and in Q3 2018; the Committee acknowledged the information it has been provided with;

- request to the Audit Committee to authorize the expansion of the scope of services rendered by KPMG for the benefit of the Bank and of its subsidiaries, and for the performance of non-prohibited services; the Committee approved the extension of the scope of services rendered by KPMG for the benefit of the Bank and of its subsidiaries, and for the performance of non-prohibited services;

- review of the Internal Control System of Bank Pekao S.A. for the year 2017; the Committee acknowledged the aforementioned document, issued a positive opinion thereon and decided to recommend the Supervisory Board to adopt it;

- report on the activities of the Compliance Department in 2017 and on the operation of the system supervising the compliance of the operation of the Pekao Brokerage House with legal regulations in 2017; the Committee acknowledged the report it has been submitted with and decided to recommend the Supervisory Board to adopt it;

- report on the activities of the Compliance Department in Q1, Q2 and Q3 2018, and the plan of activities of the Compliance Department for 2019; the Committee acknowledged the reports it has been submitted with and decided to recommend the Supervisory Board to approve the plan of activities of the Compliance Department;

- information on the status of implementation of post-inspection recommendations issued by the Financial Supervision Authority after a problem inspection conducted at the Bank in 2017, and information on their verification performed by the Internal Audit Department; the Committee acknowledged the information it has been provided with and recommended that it be submitted to the Supervisory Board for information as well;

- information on the status of M&A projects in progress at the subsidiaries; the Committee acknowledged the information it has been provided with

- information on IT-related spending in Q1 and Q2 2018; the Committee acknowledged the information it has been provided with;

- information on marketing cost of Bank Pekao S.A. in Q1 and Q2 2018; the Committee acknowledged the information it has been provided with;

- request for the approval of amendments to the 2018 annual Audit Plan, along with information on the intention to conduct an independent assessment of the activities of the Internal Audit Department, pursuant to recommendation H of the Financial Supervision Authority; the Committee issued a positive opinion on the amendments to the annual Audit Plan and decided to recommend the Supervisory Board to approve them. Furthermore, the Committee acknowledged information on the intention to conduct an independent assessment of the activities of the Internal Audit Department, pursuant to recommendation H of the Financial Supervision Authority;

- request of the Management Board of a subsidiary company - Pekao Financial Services - to approve the performance, by KPMG Advisory Spółka z ograniczoną odpowiedzialnością spółka komandytowa ("KPMG Advisory"), of an Authentication Service by reviewing a transfer agent's description of the services rendered by Pekao Financial Services; the Committee approved the performance, by KPMG Advisory, of the Authentication Service consisting in a review of a transfer agent's description of the services rendered by Pekao Financial Services;

- information on the review of the Bank's shares held in affiliated companies with Italian shareholding, as at 30 June 2018; the Committee acknowledged the information it has been provided with;

- information on the legal suit filed by Euronet Polska Sp. z o.o.; the Committee acknowledged the information it has been provided with;

- Internal Audit Strategy for 2018 - 2020; the Committee issued a positive opinion on the Internal Audit Strategy for 2018 - 2020 and decided to recommend the Supervisory Board to approve it;

- Audit Plan of Bank Pekao S.A. for 2019, including, inter alia, the 2019 annual audit plan, the 2019-2023 long term audit plan, as well as the annual and the long-term Pekao Brokerage House audit plan; the Committee issued a positive opinion on the Audit Plan of Bank Pekao S.A. for 2019, including, inter alia, the 2019 annual audit plan, the 2019-2023 long term audit plan, as well as the annual and the long-term Pekao Brokerage House audit plan and decided to recommend the Supervisory Board to approve it.

 

As far as the Internal Audit function is concerned, the Committee was reviewing reports on the activities of the Internal Audit function on a regular basis.

The Committee has also appointed the Audit Committee Secretary. Additionally, the Audit Committee has approved the candidate for the position of the Head of Internal Audit, and the terms of their remuneration.

 

The Audit Committee was performing its tasks in accordance with the scope of its rights and obligations.

Report on the activity of the Nominations and Remuneration Committee in 2018

Members of the Nominations and Remuneration Committee

The Nominations and Remuneration Committee is made up of three to five members selected from Supervisory Board members.

From 1 January 2018 to 31 December 2018 the Nominations and Remuneration Committee was made up of the following members:

Paweł Stopczyński - Chairman of the Committee,

Sabina Bigos-Jaworowska - Member of the Committee,

Paweł Surówka - Member of the Committee,

Joanna Błaszczyk - Member of the Committee (from 23 July 2018).

Duties of the Nominations and Remuneration Committee

The Committee operates pursuant to the Bank Supervisory Board Regulations and pursuant to the Nominations and Remuneration Committee Regulations that were amended on 11 October 2016.

It is the aim of the Committee to support the Bank's Supervisory Board in the performance of its duties, inter alia by the following:

- submitting proposals concerning employment contract terms and conditions, or terms and conditions establishing a different form of a legal relationship between the Bank and the Management Board members, including terms and conditions of remuneration of the Bank's Management Board members, approving the policy concerned with variable components of remuneration of persons holding managerial positions at the Bank, pursuant to separate regulations, as well as submitting, to the General Meeting of Shareholders, proposals concerning remuneration of the Supervisory Board,

- coming up with recommendations concerning the fulfilment of suitability requirements for the purpose of appointing members of the Bank's management Board and Supervisory Board,

- drawing up, for the General Meeting of Shareholders, a report on the functioning of the Bank's remuneration policy.

In its activities, the Committee relies on prudent and stable risk, capital and liquidity management policies, as well as on care for long-term well-being of the Bank, interests of the Bank's shareholders and investors.

 

Meetings of the Nominations and Remuneration Committee

 

In 2018 the Nominations and Remuneration Committee met on 8 occasions, on 26 February, 13 March, 29 March, 9 May, 12 July, 20 August (and on 23, 27 August and 19 October), 30 October, 13 November.

The Committee members who attended the individual meetings are listed below:

The Nominations and Remuneration Committee members who attended the individual meetings are listed below:

Date Members participating in the meeting

26 February P.Stopczyński, S.Bigos-Jaworowska

13 March P.Stopczyński, S.Bigos-Jaworowska, P.Surówka

29 March P.Stopczyński, S.Bigos-Jaworowska, P.Surówka

9 May P.Stopczyński, S.Bigos-Jaworowska, P.Surówka

12 May P.Stopczyński, S.Bigos-Jaworowska, P.Surówka

20, 23, 27 August

And 19 October P.Stopczyński, S.Bigos-Jaworowska, P.Surówka, J.Błaszczyk

30 October P.Stopczyński, S.Bigos-Jaworowska, P.Surówka

13 November P.Stopczyński, S.Bigos-Jaworowska, P.Surówka, J.Błaszczyk

In 2018, the Nominations and Remuneration Committee issued and opinions and recommendations on, or acknowledged information about the following:

- Issuing an opinion on the Variable Remuneration System for Managerial Staff and assumptions for the Variable Remuneration System for Managerial Staff in 2018;

- Issuing an opinion on the establishment of individual objectives for Management Board members for 2018;

- Issuing an opinion on updating the Suitability Assessment Policy;

- Acknowledging information on the Program of Voluntary Resignations for the Bank's employees;

- Acknowledging information about the Report on Variable Remuneration Components Policy;

- Acknowledging information on the methods used to identify the holders of key positions (Risk Takers);

- Issuing an opinion on the Report on the assessment of the application of the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna in 2017;

- Acknowledging information and issuing an opinion on the distribution of the bonus quota in 2017, and on the achievement of the individual objectives of the Bank's Management Board members holding their positions in 2017, along with the variable remuneration element-related settlements;

- Holding a discussion on the performance of Supervisory Board's duties related to the implementation of the resolutions of the General Meeting of Shareholders dated 21 June 2018 on the remuneration of Supervisory Board and Management Board members, with issuing an opinion on documents for the

Management Board members and on the Management Board members' remuneration terms and conditions;

- Issuing an opinion the remuneration terms and conditions for Management Board member candidates, and for persons appointed to hold key positions at the Bank;

- Issuing an opinion on the processing of reports made by Supervisory Board members and concerned with their holding of additional positions in the statutory bodies of entities, which may impact the assessment of individual and collective suitability of Supervisory Board members;

- Acknowledging information on amendments to the Banking Law.

 

The Nominations and Remuneration Committee was performing its task in accordance with the scope of its duties and obligations and was taking advantage of services rendered by an external consultant who supported the on-going activities of the Nominations and Remuneration Committee and of the Supervisory Board in remuneration-related issues.

Report on the activity of the Risk Committee in 2018

Members of the Risk Committee

The Risk Committee is made up of three members selected from Supervisory Board members, with at least one of them being an independent Supervisory Board member.

From 1 January 2018 to 31 December 2018 the Risk Committee was made up of the following members:

Stanisław Ryszard Kaczoruk - Chairman of the Committee,

Michał Kaszyński - Member of the Committee,

Marian Majcher - Member of the Committee.

Duties of the Risk Committee

 

The Risk Committee operates pursuant to the "Risk Committee Regulations" adopted by the Supervisory Board, by means of its resolution No. 55/15 of 18 December 2015. It is the mission of the Committee to support the Supervisory Board in the fulfillment of its duties in the following areas: exercising supervision over the risk management system and over the assessment of adequacy and effectiveness of that system. In its activities, the Committee pursues a prudent and stable approach to risk, capital and liquidity management, attaching particular attention to long-term well-being of the Banka and to the interests of its shareholders.

 

It is the task of the Committee to express its opinion about the following:

- the overall readiness of the Bank to accept risk, both currently and in the future, expressed in the form of its risk appetite,

- the strategy for managing risk in the operation of the Bank, as drawn up by the Management Board, including credit, financial and operational risk policies,

- reports concerned with risk profile and with implementation of risk management strategies, as submitted by the Bank's Management Board.

 

It is also the task of the Risk Committee to support the Supervisory Board in exercising supervision over the implementation, by the top management, of the strategy concerned with managing risk in the operation of the Bank, as well as in verifying whether the general prices of assets and liabilities offered to customers fully account for the business and risk strategies of the Bank. Where the level of such prices fails to appropriately reflect those types of risk in the manner provided for in the said strategies, the Committee is tasked with submitting, to the Bank's Management Board, proposals aiming to ensure the adequacy between the prices of assets and liabilities on the one hand, and the relevant risk types on the other.

 

While analyzing risk-related issued, the Risk Committee decided to become acquainted with IT and GDPR-related topics affecting the Bank's operation, considering that such problems may be of key significance, especially in terms of cybersecurity, effectiveness of business support or personal data management.

 

The Risk Committee performs also other tasks stemming from the applicable legal regulations or from recommendations issued by supervision authorities.

Meetings of the Risk Committee

 

In 2018 the Risk Committee met on 3 occasions (26 February, 9 May, 23 July).

 

The Risk Committee members who attended the individual meetings are listed below:

Date Members participating in the meeting

26 February S.R.Kaczoruk, M.Kaszyński, M.Majcher

9 May S.R.Kaczoruk, M.Kaszyński, M.Majcher

23 July S.R.Kaczoruk, M.Kaszyński, M.Majcher

 

Main issues reviewed by the Risk Committee in 2018

 

The Committee reviewed and discussed the following materials:

- Review of the ICAAP process along with the 2018 ICAAP policy; the Risk Committee issued a positive opinion on the results of the review and on the said Policy;

- Operating loss limits and alert values for 2018; the Risk Committee issued a positive opinion on the aforementioned document;

- 2018 Investment and Market Risk Policy; the Risk Committee issued a positive opinion on the aforementioned Policy;

- 2018 Credit Risk Policy and Strategies of Bank Pekao S.A.; the Risk Committee issued a positive opinion on the aforementioned Policy;

- 2018-2020 IT Strategy of Bank Pekao S.A. and ICT Security Strategy for 2018-2020, along with information on implementation of the ITC Strategy in 2017; the Risk Committee issued a positive opinion on these documents;

- Annual risk Models Report for 2017 and updated "Risk Models Management Principles" Policy; the Risk Committee issued a positive opinion on these documents;

- Quarterly credit portfolio and debt-recovery reports; the Risk Committee issued a positive opinion on the aforementioned documents;

- Quarterly financial risk reviews; the Risk Committee issued a positive opinion on the aforementioned documents;

- Quarterly operating risk controlling reports; the Risk Committee issued a positive opinion on the aforementioned documents;

- Periodic report on the business continuity and crisis management system in place at Bank Pekao S.A. in 2017; the Risk Committee issued a positive opinion on the report;

- Periodic report on the business continuity and crisis management system in place at Bank Pekao S.A. in 2017; the Risk Committee issued a positive opinion on the report;

- Information on the highest exposures of the Bank classified as at-risk exposures on 31 December 2017; the Risk Committee issued a positive opinion on the aforementioned document;

- Information on cash turnover at Bank Pekao S.A.; the Risk Committee acknowledged that information;

- Information on IT-related issues, with a particular emphasis placed on the development of the Bank's IT systems in the nearest future; the Risk Committee acknowledged that information;

- GDPR implementation status at the Bank; the Risk Committee discussed and acknowledged that information.

 

The Committee's meetings were attended by Vice Presidents of the Board in charge of the Risk Management Division and the Operations and Service Area, as well as by other management representatives responsible for performing tasks within the aforementioned areas.

Evaluation of the Bank's standing in 2018, broken down into assessment of internal control, risk management and compliance systems, as well as the internal audit function

Pursuant to the Code of Best Practices for WSE Listed Companies, the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna has assessed the standing of the bank in 2018, evaluating also the internal control system and the risk management system in place at the Bank.

 

General assessment of the Bank's standing

 

In the opinion of the Supervisory Board, the general economic and financial standing of Bank Pekao S.A. is stable. Bank Pekao S.A. meets all safe operations and capital adequacy requirements and ensure the security of funds deposited by its customers, displaying exceptional capital strength and resilience. The Supervisory Board Bank Pekao S.A. has a positive opinion about the results achieved by the Bank and the Bank Pekao S.A. Capital Group in 2018.

 

The Bank's 2018 activities focused on continued, sustainable growth in all areas, on effective strengthening of its good position on the retail banking market, and of its leader position in the corporate banking domain.

 

In 2018, the Bank generated a net profit of PLN 2,310.6 million, which was by PLN 222.5 million, i.e. 10.7% higher than the net profit generated in 2017.

 

The net profit of the Bank Pekao S.A. Capital Group attributable to the Bank's equity holders equaled PLN 2,287.2 in 2018 and was by PLN 187.9 million, i.e. 7.6% lower than the result reported for 2017.

The interest income was by 9.6% higher YoY in the Bank and by 7.8% higher YoY in the Capital Group, mainly thanks to the higher volumes of loans and deposits alike. Higher margin and higher dividend revenues.

 

The Group's non-interest income achieved in 2018 was by 1.7% higher YoY, while for the Bank it was by 5.7% lower YoY. The result on fees on commissions (including commission resulting from margins on foreign exchange transactions with customer) was by 4.7% higher YoY in the Group and by 2.6% lower YoY in the Bank, compared to 2017.

 

Costs of the operating activity of the Bank and of the Group in 2018 were higher, by 3.1% YoY and 5.5% YoY, respectively, due to higher personnel costs (mainly to the amount of approximately PLN 50 million related to the Voluntary Resignation Program that could be taken advantage of by employees eligible to retirement in 2018) and other administration costs (mainly those related to marketing)

Return on Equity (ROE) amounted to 10.7% and 10.2% for the Bank and for the Group, respectively.

Thanks to the effective commercial activity of the Bank and the Group in 2018, a significant growth in loan volumes was reported both in the area of retail loans (by 10.6% YoY for the Bank and 10.5% YoY for the Group). Such a substantial increase in lending was largely financed by higher volumes of retail deposits growing by 11.9% YoY in the Bank and 11.8% YoY in the Group.

The solid liquidity structure of the Bank and of the Group is reflected by the net loans-to-deposits ratio which equaled, at the end of December 2018, 86.7% and 89.5%, respectively. This, in conjunction with the high value of capitals, allows continued and stable growth of the Bank's and the Group's operations. The total capital ratio (TCR) for the Bank amounted to 18.7% at the end of December 2018 and was higher (by 0.3 p.p.) than at the end of 2017. The total capital ratio (TCR) for the Group equaled 17.4% at the end of December 2018 and was higher (by 0.3 p.p.) then at the end of December 2017.

 

Bank Pekao S.A. was consistently implementing the strategy of strengthening its position on the market of financing housing and consumer goods. In 2018, the Bank sold nearly PLN 10 billion worth of mortgage loans, which is a record-high result and which has translated into a 12% (YoY) increase in the value of PLN-denominated mortgage loans. The market share in new sales equaled nearly 19%.

This exceptional result was also boosted by the sale of loans granted under the government's "Apartment for the Young" (Mieszkanie dla Młodych - MdM) program supporting those under the age of 35 in the acquisition of their first, new apartment. The MdM Program was discontinued at the end of 2018. During the term in which it was available, Bank Pekao S.A. extended over 41,000 loans for the total value of nearly PLN 7.3 billion. In 2018 the value of cash loans for private customers increased by 16% YoY. Sale of cash loans was boosted by the competitive Express Loan (Pożyczka Ekspresowa) offering, individual loans based on CRM tools, and effective use of electronic sale channels: PeoPay mobile banking app and Pekao24 online banking system.

 

In line with the strategy it has adopted, Bank Pekao S.A. remains the Bank of first choice for corporate customers, rendering both a comprehensive range of services offered by a universal bank, and all other financial services available in Poland (including leasing, factoring and investment consulting, inter alia in relation to mergers and acquisitions). Every other big corporation in Poland is currently taking advantage of the Bank's services. The Corporate Banking, Markets and Investment Banking Division currently serves approximately 13,000 entities, including approximately 2,500 foreign customers and over 2,500 local government entities and municipal companies. The Bank maintains its position of the leading corporate bank a leader of innovative product solutions targeted for businesses and institutions. The broad product offering, innovative solutions and a customized approach allow it to provide a comprehensive range of services for businesses, institutions and public sector entities

Bank Pekao S.A. is a universal bank offering all financial services that are available in Poland to private and institutional customers. The broad product offering, innovative solutions and a customized approach allow it to provide a comprehensive range of services for customers, and the customer service model relied upon guarantees the highest quality of that service and ensures that they are always suited to their changing needs. Since 2017 Bank Pekao S.A. has been a part of the PZU S.A. Capital Group - the largest financial institution in Central and Eastern Europe.

Pursuant to the "Strength of the Polish Bison" (Siła Polskiego Żubra) strategy adopted for 2018-2020, the Bank intends to continue activities aiming to attain the positions of a profitability leader by building lasting business relationships and improving its operational efficiency. The following shall remain the Bank's strategic priorities for 2019: smart growth, building long-term customer relations based on an integrated service model, operational transformation designed to strengthen its position of the best recognized bank in Poland, thanks to a professional approach creating value for customers.

 

The Bank invests in training, professional growth of its employees (in line with their abilities and potential), in creating a friendly working atmosphere and surveys employee involvement and satisfaction levels.

 

The Bank relies on certified training-related programs and processes and was the only financial institution in Poland that received, in 2018, the Pearson Assured status awarded under a rigorous audit conducted by Pearson.

 

Bank Pekao S.A. was once again distinguished with the Top Employers Polska certificate awarded by the Top Employers Institute - an achievement that confirms the Bank's employee-focused approach.

As it was the case in previous years, the Bank was rewarded and distinguished, in 2018, for its achievements and for the innovation-oriented nature of the solutions it offers, in various prestigious contests organized by foreign and domestic magazines. Congratulating the Bank on the prizes it has won, the Supervisory Board agrees with the Management Board that awards received for innovative products and services are of particular significance for the institution.

Bank Pekao S.A. received, for the second year in a row, from the Global Banking and finance Magazine, the title of Poland's Best Corporate Bank (Best Corporate Bank in Poland 2018).

In February 2018 Bank Pekao S.A. received a distinction for the most active participants of the National Securities Deposit and the Central Counterparty, during a Gala summing up the Stock Exchange Year of 2017, held at Warsaw's Stock Exchange Center. Those institutions were awarded during the ceremony that received the best results in 2017 and considerably contributed to the development of the Polish capital market.

 

Bank Pekao S.A. was the winner of the 2018 Business Inspiring Companies competition, winning in the INNOVATIONS category with its Pekao Connect service. The contest is organized by the Newseria News Agency under the patronage of the National Center for Research and Development (NCBR) and the Scientific and Academic Computer Network (NASK).

Bank Pekao S.A. received, for the second year in a row, the title of "The Best Investment Bank in Poland for 2018" awarded by the Global Finance Magazine.

Bank Pekao S.A. received the Europe Banking Award 2017 from the prestigious EMEA Finance

magazine - a distinction that acknowledges the Bank's position of one of the best financial institutions in Europe.

 

Bank Pekao S.A. received, for the sixth time in a row, the Best Sub-Custodian award from the Global Finance magazine.

 

Bank Pekao S.A. received also, for the third time in a row, the highest 5-star note in the prestigious private banking ranking by "Forbes". This particular distinction confirms the high quality of private banking services and the availability of solutions that are tailored to the needs of a particularly demanding group of customers.

 

The Private Banking offering of Pekao S.A. has been ranked, for the fourth time in a row, as the best solution of this type in Poland by Global Finance. Global Finance's Private Bank Awards 2019 is one of the most comprehensive rankings classifying the banks' offering for the most affluent customers.

Assessment of the internal control system

Bank Pekao S.A. has in place an internal control system that complies with the guidelines set forth in Recommendation "H" of the Polish Financial Supervision Authority. The said system comprises the following:

1) a control function (control mechanisms, independent monitoring of compliance with control mechanisms, control function-related reporting),

2) an independent compliance unit (Compliance Department),

3) an independent internal audit unit (Internal Audit Department)

and covers all organizational units of the Bank and its subsidiaries.

 

The Supervisory Board positively assesses the functioning of the internal control system at Bank Pekao S.A., as it ensures effectiveness and efficiency of the Bank's operations, reliability of financial reports, compliance with risk management principles in place at the Bank, compliance of the Bank's operations with applicable laws, internal regulations and market standards. The rules pursuant to which internal control is exercised, including the control mechanisms approved by the Management Board and the Supervisory Board of Bank Pekao S.A., are adapted to the organizational structure of the Bank, to the magnitude and profile of risks identified in the ICAAP Procedure, and to the scale of the Bank's activity. These rules are reviewed and assessed within the framework of internal audit procedures.

The Internal Control System in place at the Bank comprises all organizational levels and is enforced by the Bank's statutory organs, by its individual organizational units, by persons in charge of exercising supervision at all management levels, and by all employees. The primary objectives of the Internal Control System include the following:

1) ensuring effectiveness and efficiency of the Bank's operations,

2) ensuring reliability of financial reports,

3) ensuring that risk management principles in place at the bank are complied with,

4) compliance of the Bank's operations with applicable laws, internal regulations and market standards.

More detailed, specific objectives of the Internal Control System are identified as well for each of the general goals listed above.

The Internal Control System in place at the Bank comprises three lines of defense:

1) first line of defense - managing the risk inherent in the Bank's operational activity,

2) second line of defense - risk management control exercised by employees holding specific positions, or by organizational units - independently of risk management performed as part of the first line of defense,

3) third line of defense - independent Internal Audit Department.

The Bank ensures independent monitoring of compliance with control mechanisms in relation to all of its processes, by:

1) horizontal monitoring performed within the framework of the first line of defense and vertical monitoring of the first line of defense performed by the second line of defense,

2) horizontal monitoring within the framework of the second line of defense,

3) horizontal monitoring within the framework of the third line of defense.

Compliance with control mechanisms is monitored, independently, via: on-going verification and testing.

The dedicated structures fully cover the crucial risk areas that the three lines of defense referred to above are concerned with.

Control functions are performed, in relation to subsidiaries, by the Bank's representatives being members of their supervisory boards.

The Management Board of the Bank is responsible for designing, implementing and ensuring that an independent, adequate and effective Internal Control System is available at all organizational units and at all organizational positions of the Bank.

The Supervisory Board oversees the introduction and operation of the adequate and effective Internal Control System.

 

Assessment of the risk management system

 

The Supervisory Board has a positive view on the risk management system in place at the Bank and in the Pekao Group.

The risk management system is of a comprehensive and consolidated character and covers all units of the Bank and its subsidiaries.

 

The risk management strategy in the form of the ICAAP Policy adopted by the Management Board of the Bank in accordance with the regulatory requirements was approved by the Supervisory Board. The ICAAP Policy is subject to regular reviews and the required updates in order to adjust it to the best market practices, legal norms and changes taking place in the Bank and in its operating environment, and also in order to maintain its validity and adequacy to the scale and complexity of the activities performed by the Bank and by the Group.

 

In accordance with the law and with supervisory regulations, the Management Board of the Bank is responsible for achieving the strategic risk management goals. The Supervisory Board, supported by the Supervisory Board's Risk Committee, oversees the compliance of the Bank's policy related to exposure to various risks with the Bank's overall strategy and financial plan, in particular by defining the Bank's risk appetite and by approving the following documents adopted by the Management Board: risk management strategy (ICAAP Policy), capital management strategy, credit policy, investment and market risk policy, operational risk strategy and model policy, as well as by reviewing periodic reports of the Management Board concerned with the management of individual risk types.

 

The risk management system in place at the Bank constitutes an integral element of the Bank's management system. The system has been adapted to the Bank's organizational structure and it is adequate to the activities conducted by the Bank, as well as to the magnitude and profile of Pillar I risks and Pillar II risks defined under ICAAP.

 

The Bank applies, as part of the risk management system, formal procedures aiming to identify, measure and monitor risks, as well as risk-mitigating limits. The managerial information system in place at the Bank enables effective monitoring of risk levels. The risks are monitored with regard to profitability and the capital required to take them.

 

Credit risk, liquidity risk, market risk and operational risk are managed by the Risk Management Division which is supervised by the relevant Vice President of the Management Board. Other risks are managed jointly between the Risk Management Division and other divisions involved in controlling such risks.

 

The following play an important role in risk management: credit risk - Credit Committee, market and liquidity risk - Asset, Liability and Risk Committee, operational risk - Operational Risk Committee and Bank Security Committee, model risk - Model Risk Committee. Effective risk management is one of the strong points of the Bank.

 

Assessment of the non-compliance risk management system

 

The Supervisory Board has a positive view on the system used to manage the risk of non-compliance that aims to ensure the activities of the Bank and of its employees comply with the applicable laws, internal regulations and market standards relied upon in the Bank's processes.

There is a separate compliance unit operating with the Bank's structure, namely the Compliance Department that is fully independent (both organizationally and operationally) and that reports directly to the President of the Bank's Management Board. The Compliance Department constitutes a key element in the process of ensuring compliance within the Bank.

 

The Bank ensures compliance by applying purpose-designed control mechanisms and tools relied upon to manage the risk of non-compliance. While performing its control functions, the Compliance Department designs and supervises the implementation of control mechanisms aiming to ensure compliance with applicable laws, internal regulations and market standards, or applies these on its

own, and monitors, in an independent manner, their application by other organizational units of the Bank. The Compliance Department is responsible for implementation, at the Bank, of the process of managing the risk of non-compliance that consists in identifying, assessing, controlling and monitoring the risk of non-compliance of the Bank's activity and in submitting relevant reports. Reports on the implementation of the tasks of the Compliance Department, along with estimates of the risk of non-compliance, are submitted to the Management Board and to the Supervisory Board. The Bank oversees also the risk of non-compliance related with the activity of its subsidiaries.

 

Assumptions of the process relied upon to manage the risk of non-compliance have been defined in specific regulations drawn up by the Management Board and approved by the Supervisory Board. These include the following: Compliance Policy of Bank Pekao S.A. and Regulations of the Bank Pekao S.A. Compliance Department. The key elements supporting the aforementioned process include:

a) supervision exercised by the Supervisory Board over, and liability of the Management Board for effective management of the risk of non-compliance,

b) properly defined organizational structure and relevant HR policy,

c) internal regulations concerned with ensuring compliance,

d) process of identifying, assessing, controlling, monitoring and reporting the risk of non-compliance,

e) training,

f) on-going cooperation of the Compliance Department with the Internal Audit Department and with other organizational units responsible for performing control functions and for managing the risk of non-compliance.

 

In order to ensure compliance with applicable laws, internal regulations and market standards, all of the Bank's employees apply relevant control mechanisms or monitor, in an independent manner, the compliance with control mechanisms, in accordance with their scopes of duties and obligations.

 

The Supervisory Board oversees the process of managing the risk of non-compliance with the support of the Audit Committee. The Supervisory Board assesses effectiveness of the process of managing the risk of non-compliance based on periodic and annual reports of the Compliance Department, information from the Management Board and opinions of the Audit Committee. The Supervisory Board reviews and approves the Bank's annual report on the management of the risk of non-compliance. The Supervisory Board is also responsible for approving the Compliance Plan for the following year.

In the opinion of the Supervisory Board, cooperation with the Compliance Department is good.

 

Assessment of the internal audit function

The Supervisory Board has a positive view on the activity of the internal audit function of Bank Pekao S.A. Appropriate independence of the Internal Audit Department was ensured, and it was also provided with the human resources and funds required for its effective operation. From the organizational point of view, the Internal Audit Department reports directly to the President of the Management Board, while from the functional point of view - to the Audit Committee and the Supervisory Board.

 

The Supervisory Board approved the appointment of the new Internal Audit Department Director and approved the report on the activity of the Internal Audit Department in 2017.

Changes to the 2018 Annual Audit Plan were approved in 2018.

 

The positive opinion on the internal audit function is also based on the assessment of key performance indicators presented, on an annual basis, to the supervisory organs by the Director of

the Internal Audit Department and proving that the objectives that have been set forth are actually met.

The Director of the Internal Audit Department submitted, to the Audit Committee, quarterly reports on the operation of the Internal Audit Department. The annual report on the activity of the Internal Audit Department was submitted to the Supervisory Board. Information on the assessment of adequacy and efficiency of internal control and risk management systems was submitted by the Internal Audit Department as well.

 

Summary

 

The Supervisory Board considers the situation of the Bank to be satisfying and stable. Such an opinion is justified by the following: (i) good financial results, (ii) effective cost management processes, (iii) effective and consistent risk management processes, (iv) strong capital and liquidity base, (v) high level of security offered by the Bank, (vi) efficient operation of the internal control system, and (vii) operational efficiency.

 

In the opinion of the Supervisory Board, Bank Pekao S.A. enjoys a strong capital and liquidity position and while maintaining the highest risk management standards and continuing to improve its cost effectiveness. This enables the Bank to effectively implement its strategic objectives set forth in the Bank's 2018-2020 "Strength of the Polish Bison" strategy and to achieve the position of a profitability leader in the Polish banking sector by entering the path of smart growth thanks to a business model that is based on high efficiency and quality of its processes.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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