The amendment on cooperative banks returns to the committee. Behavior of an “integrated association”?

The joint parliamentary committees for deregulation and public finance will again consider the draft amendment to the Act on the Operation of Cooperative Banks after the PiS club proposed during the second reading amendments repealing the deletion of the provisions regarding integrated associations.

An integrated association is an organizational form of cooperative banks which, pursuant to the amendment to the Act, is to be eliminated from the Polish legal system.

As indicated in the justification to the draft act, the provisions regarding integrated association were not applicable in practice. “To date, no associations of this type have been established, and the vast majority of cooperative banks are members of institutional protection systems or operate independently,” it added.

Earlier, parliamentary committees introduced a number of amendments to the draft act on the operation of cooperative banks, most of which were editorial and clarifying in nature. The project includes, among others: abolition of the obligation to inform the Polish Financial Supervision Authority about credits or loans granted to shareholders of cooperative banks.

The project proposes abolishing the obligation to provide the Polish Financial Supervision Authority (KNF) with information on loans, cash advances, bank guarantees and sureties granted to shareholders of a cooperative bank. There will also be no obligation to store this data.

It is also proposed to unify the rules of participation in banking consortiums, thanks to which all cooperative banks will be covered by uniform regulations. This is to allow banks that participate in consortiums to reach a wider group of customers with their offers.

The proposed provisions also concern the simplification of the rules for introducing changes to the association agreement. After the changes, the association agreement will be a multilateral agreement concluded between the associating bank and all associated banks, so any change will only require approval by the Polish Financial Supervision Authority. Currently, the agreement is bilateral, which means that any change requires signing an annex with each associated bank.

The Act defines in detail the tasks of the association's bodies, such as the meeting of presidents and the council, and sets out the rules for their appointment and cooperation. An important element of the regulation is the implementation of financial support and sub-participation mechanisms, which is intended to facilitate bank merger processes and increase the stability of the protection system.

The entire proposal serves to increase the security of deposits and modernize the organizational structures of cooperative banks in Poland. (PAP)

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