Report No. 39/2015

Legal basis:

Art. 5 section 1 item 26 of the Ordinance of the Minister of Finance of 19 February 2009 on current and periodical information submitted by issuers of securities and the conditions of recognising information required by the law of a non-member state as equivalent.

Contents of the report:

The Management Board of PKO Bank Polski S.A. (“Bank”) informs that on 17 June 2015 rating agency Standard and Poor’s published a press release on the website www.standardandpoors.com (“Release”), in which it informed about the research update and the change of Bank’s ratings.

According to the Release Standard and Poor’s lowered Bank’s long-term credit rating and senior unsecured rating to ‘BBB+’ from ‘A-’. At the same time the agency affirmed ‘A-2’ short - term credit rating. The outlook is negative.

Agency affirmed ‘bbb’ for Bank’s rating ‘SACP’ (stand-alone credit profile). Standard and Poor’s noticed higher asset quality, lower cost of risk and the strong liquidity of the Bank.  Standard and Poor’s describes in the Release Bank’s capital and earnings as adequate.

Following Bank’s government support review the agency decided, that the Bank cannot be classified as a government – related entity (‘GRE’). As a consequence the agency reduced the government support indicator by two notches. Standard and Poor’s at the same time expressed the opinion that the Bank can receive the government support because of the  systemic important role of the Bank for the Polish economy, adding one notch to the government support indicator. Standard and Poor’s highlighted, that the Polish government remains the Bank’s largest shareholder, but it reduced its stake in the Bank’s share capital to 31.4% from 51.2% since the year 2013.

The negative outlook results from the fact, that Standard and Poor’s took into account the (expected by the agency for the beginning of the year 2016) implementation of the European Union Bank Recovery and Resolution Directive (BRRD). It causes, in agency’s opinion, the possibility to lower by one notch long term rating, resulting from the implementation of the regulations causing likelihood that Bank’s creditors may incur losses if the Bank were to fail and the limited possibility of obtaining state support for the Bank.