Polish Government Adopting an Amendment to the Act on Mortgage Bonds and Banks

The Polish government adopted a draft amendment to the act about mortgage bonds and mortgage banks. The draft was submitted by the Ministry of Finance. The draft amendment on covered bonds and mortgage banks adopted by the government adjusts Polish government law to the European Union directive on the issue of covered bonds and public supervision over these bonds. In Poland, the equivalent of these bonds is covered bonds issued by specialized mortgage banks.

The Polish Government Morgag Amendments:

The draft amendment introduces a definition of a covered bond referring to the double recourse mechanism. It provides investors with the possibility to pursue claims both against hidden bond issuers and against the pool of assets constituting cover for covered bonds.

The amendment also extends the scope of information that will be included in the terms of the issue of covered bonds. In addition, the draft also establishes the conditions for qualifying derivatives to the pool of assets underlying the covered bonds. The project also includes other changes aimed primarily at:

1. Improving the institution of calls to subscribe for the sale or exchange of shares in public companies, which in particular are to bring benefits to minority shareholders by increasing the protection of their interests;

2. Increasing the effectiveness of the Bank Guarantee Fund’s activities in the area of ​​resolution, incl. through the provisions on the principles and procedure of issuing own bonds by the BGF for the implementation of the goals provided for in the Act;

3. Enabling the creation and operation of an institutional protection system in the commercial banking sector in the form of a joint-stock company, which is a modern way to protect the financial liquidity and solvency of participating banks.