Integrated Report 2021

Corporate governance

Legal and regulatory basis for the corporate governance

Corporate governance in BNP Paribas Bank Polska S.A. results from legal acts (in particular Code of Commercial Companies, Banking Law and laws regulating capital market) and recommendations included in the documents: “Best Practices for WSE Listed Companies” and “Principles of Corporate Governance for supervised institutions”.

In accordance with § 70, par. 6, point 5 of the Regulation of the Minister of Finance of 29 March 2018 concerning current and periodic information reported by issuers of securities and conditions for recognizing as equivalent information required under the law of a non-member state (consolidated text: Journal of Laws of 2018, item 757), the Management Board of BNP Paribas Bank Polska S.A. presents the following information regarding compliance with corporate governance principles in 2021.

Corporate governance principles applicable to the Bank

The Bank is subject to “Principles of Corporate Governance for supervised institutions” of 22 July 2014, issued by the Polish Financial Supervision Authority. The Principles defines internal and external relations of supervised institutions, including relations with the shareholders and customers, their organisation, functioning of internal control, and key systems and internal functions, and also statutory bodies and the principles of their cooperation. The Principles are available on the website of the Polish Financial Supervision Authority.

Principles of Corporate Governance for supervised institutions were adopted by the Bank’s Management Board and Supervisory Board in December 2014 and by the General Shareholders’ Meeting in February 2015.

The Bank’s position with respect to the application of Principles of Corporate Governance for supervised institutions was updated in 2017 and expressed in the Resolution of the Bank’s Management Board dated 26 April 2017, subsequently confirmed by the Supervisory Board on 11 May 2017 and adopted by the General Shareholders’ Meeting on 22 June 2017. The aforementioned position is published on the Bank’s website.

The Bank’s annual statement on the application of Principles of Corporate Governance for supervised institutions is available in the „Report on the activities of the Supervisory Board of BNP Paribas Bank Polska S.A. and its committees” together with the assessments indicated in chapter 2.11 of the “Best Practice for WSE Listed Companies 2021” and the assessment of the Bank’s compliance with the „Principles of Corporate Governance for supervised institutions of 22 July 2014 issued by the Polish Financial Supervision Authority”.

Since 1 January 2016 untill 30 June 2021, the Bank was subject to the “Best Practice for WSE Listed Companies 2016”, as adopted by the Warsaw Stock Exchange Supervisory Board Resolution No. 26/1413/2015, dated 13 October 2015.

In its Resolution No. 7/BZ/3/2016 of 20 January 2016, the Bank’s Management Board adopted the principles of corporate governance described in the “Best Practice for WSE Listed Companies 2016”, with individual exceptions. The application of the principles was subject to constant review.

A code of corporate governance “The Best Practice of GPW Listed Companies 2021” (“Best Practice”, “DPSN 2021”) as approved by the Warsaw Stock Exchange (“GPW”) Supervisory Board’s resolution no 13/1834/2021 of 29 March 2021, entered into force on 1 July 2021 and replaced previous version called “The Best Practice of GPW Listed Companies 2016”.

The Best Practices for WSE Listed Companies 2021 is available on the Warsaw Stock Exchange website. In its Resolution No. 49/BZ/42/2021 of July 30, 2021, the Bank’s Management Board adopted the principles of corporate governance described in the “Best Practices for WSE Listed Companies 2021” obliging the Bank’s organizational units to take steps to ensure full compliance with the adopted principles. The state of application of the rules as at the end of July was described in the first EBI report published by the Bank on July 30, 2021.

The Extraordinary General Meeting of the Bank adopted the rules contained in the document „Best Practices of WSE Listed Companies 2021” by Resolution No. 3 of January 4, 2022. The state of application of the rules, taking into account the decisions of the above-mentioned EGM, was described in the EBI report published by the Bank on January 11, 2022.

Information on the application of the „Best Practices of WSE Listed Companies”, including all EBI reports, is available on the Bank’s Investor Relations website.

Management Board’s statement of compliance with corporate governance principles in 2021

Principles of Corporate Governance for supervised institutions

BNP Paribas Bank Polska S.A. in 2021 follows the “Principles of Corporate Governance for supervised institutions” with exemption regarding application of § 8 item 4 of the Principles:

„supervised institution should, if this is justified by the number of shareholders, drive at facilitating participation of all the shareholders in the meetings of the statutory body of the supervised institution, though, i.a., ensuring that active participation in a meeting of the statutory body is possible via electronic means of communication”.

Bank’s commentary

In 2021, due to the shareholder structure, as well as due to doubts as to the possibility of completely eliminating legal, organizational and technical risks associated with providing shareholders who do not attend the General Meeting in person with real-time bilateral communication and voting using electronic communication means, the Bank decided not to use the possibility of electronic participation of shareholders in the General Shareholders’ Meeting, limiting itself to recording the General Shareholders’Meeting and real-time transmission via the Internet.

The Bank is prepared regulatorily and technically to organize General Meetings using electronic communication means. The Bank has enabled shareholders to participate in the Bank’s EGM on 4 January 2022 using electronic communication means (e-GSM), including; recording and broadcasting of the EGM via the Internet, real-time bilateral communication and the exercise of voting rights during the General Meeting in person or by proxy.

This rule has been applied by the Bank since 2022. Full compliance with Corporate Governance Principles for Supervised Institutions will be confirmed on the Bank’s website after approval of the relevant decisions by the Bank’s bodies.

Best Practice for WSE Listed Companies

  • The Bank partially applied recommendation IV.R.2 relating to the issue of transmission of the General Meeting and the possibility to participate and vote in the General Meeting via electronic channels. The amended Regulations of the General Meeting enabled the organisation of General Meetings and active shareholders’ participation by using electronic forms of communication. Because of the shareholder structure and potential legal and organisational risks, the Bank applied the above principle partially, limiting itself to the real-time transmission of General Meetings (started in 2020 in accordance with Rules I.Z.1.16, I.Z.1.20, IV.Z.2).
  • The Bank partly applied rule V.Z.5. – the Supervisory Board’s consent to the conclusion by a company a significant agreement with a shareholder holding at least 5% of the total number of votes in the company or a related entity. The Bank applies the rule concerning the Supervisory Board’s approval of the conclusion of significant agreements with an affiliated entity (at present all shareholders holding more than 5% of votes are affiliated entities).
  • The following principles and recommendations were not applied: I.Z.1.10 (the Bank does not publish financial forecasts), III.Z.6. (the internal audit function and the Audit Committee at the Supervisory Board are separated in the Bank) and IV.R.3. (the Bank’s shares are listed only on the WSE).

The status of application of the „Best Practices of WSE Listed Companies 2021” at the Bank is subject to constant verification.

  • Principle 2.1.: ” Companies should have in place a diversity policy applicable to the management board and the supervisory board, approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target dates and the monitoring systems for such goals. With regard to gender diversity of corporate bodies, the participation of the minority group in each body should be at least 30%.”
  • The Bank has a diversity policy, which formally forms part of the policies of assessing the suitability of Supervisory Board Members, Management Board Members and persons performing key functions at the BNP Paribas Bank Polska S.A. The Diversity Policy with regard to the Supervisory Board was approved by the General Meeting of Shareholders on January 4, 2022.
  • The application of the criteria ensuring diversity in the Bank’s bodies is a legally binding requirement resulting from specific legal regulations as well as the EBA Guidelines applicable to banks. The Bank is an entity regulated and supervised by the Polish Financial Supervision Authority. The correctness and quality of the application of the diversity approach is monitored, inter alia, as a part of the PFSA’s verification of individual and collective suitability assessment. When selecting people for the Company’s bodies and for key functions, the Bank takes into account the criteria of reputation, honesty and ethics, sufficient time commitment, no conflict of interest, independence of judgment, knowledge, skills and experience of the candidates.
  • In the applied adequacy assessment policy, the Bank ensured the promotion of diversity in the Management Board, Supervisory Board as well as in case of key functions, from the moment of constructing a diverse pool of candidates, in order to reach a wide range of properties and competences of the Management Board and Supervisory Board Members, in order to gain different points of view and experience and enable the issuance of independent opinions and sensible decisions within the corporate bodies. As part of the appointment and suitability assessment processes, to ensure diversity the Bank takes into account such criteria as: gender, education and professional experience, specialist knowledge, age, and geographical origin.
  • The Bank attaches great importance to the real implementation of diversity, including ensuring an appropriate participation of women in the Bank’s bodies. The Bank has made a strategic decision, reflected in the diversity policy, that by 2025 it will ensure the participation of 30% of women in the Management Board and Supervisory Board separately. As at the date of publication of this report, the share of women in the Supervisory Board is 41.7%. The share of women in the Bank’s Management Board is 22.2%.
  • Compliance with the principle of diversity is monitored not only at the level of the bank’s authorities, but also at the level of managerial positions. Currently, the share of women in the highest managerial positions other than the Management Board (managing director, executive director, tribe leader) is 36.0%.
  • Due to the fact that as at the date of publishing this report on the application of the WSE Best Practices the share of women in the Bank’s Management Board has not reached the target level of 30%, the bank prudently reports that it does not apply the above rule.

In the case of several new rules that mainly relate to recurrent processes that have not yet occurred after the implementation date of DPSN 2021, i.e. after July 1, 2021.

  • Principle 1.4.: “To ensure quality communications with stakeholders, as a part of the business strategy, companies publish on their website information concerning the framework of the strategy, measurable goals, including in particular long-term goals, planned activities and their status, defined by measures, both financial and non-financial. ESG information concerning the strategy should among others:”
  • Principle 1.4.2.: „present the equal pay index for employees, defined as the percentage difference between the average monthly pay (including bonuses, awards and other benefits) of women and men in the last year, and present information about actions taken to eliminate any pay gaps, including a presentation of related risks and the time horizon of the equality target.”.
  • One of the four pillars of the current CSR and sustainable development strategy is responsibility in the workplace, where the main obligations are to promote openness and diversity and to create a friendly and responsible workplace. By implementing the best market practices, BNP Paribas Bank Polska S.A. measured the wage gap for the first time in 2020. After analysing the results, systemic and dedicated actions and recommendations (included in the annual remuneration review process) were undertaken to reduce the level of the wage gap. The wage gap ratio is measured according to the Bank’s internal methodology, taking into account the total remuneration based on the homogeneous groups of employees (created based on the employment area and the grade).
  • The GPGR calculated as at December 31, 2020 (and the methodology for its calculation) is published on the Bank’s website describing the CSR and sustainable development strategy.
  • The ratio as at December 31, 2021 was disclosed in the Annual Report 2021. The Bank includes the assumed reduction of the GPGR ratio in the new strategy of the Bank, the publication of which is scheduled for the first quarter of 2022.
  • Principle 2.11.: “In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an annual report to the annual general meeting once per year. Such report includes at least the following:”
  • Principle 2.11.1: „information about the members of the supervisory board and its committees, including indication of those supervisory board members who fulfil the criteria of being independent referred to in the Act of 11 May 2017 on Auditors, Audit Firms and Public Supervision and those supervisory board members who have no actual and material relations with any shareholder who holds at least 5% of the total vote in the company, and information about the members of the supervisory board in the context of diversity;”
  • The Bank declares the application of this principle. Information on which Supervisory Board members have no actual and material relations with any shareholder who holds at least 5% of the total vote in the company is included in the section on independence of Supervisory Board members. Information on the diversity of the SB will be included in the next SB annual report (currently this information is presented in the Mamagement Board’s Report on the activity).
  • Principle 2.11.4.: „assessment of the company’s compliance with the corporate governance principles and the manner of compliance with the disclosure obligations concerning compliance with the corporate governance principles defined in the Exchange Rules and the regulations on current and periodic reports published by issuers of securities, and information about measures taken by the supervisory board to perform such assessment;”
  • The bank declares to apply this principle. The annual report on the SB’s activities includes an overall assessment of the application of the corporate governance principles. Information on the manner of fulfilling disclosure obligations is a newly introduced rule – it will be included in the annual report of the SB for 2021.
  • Principle 2.11.5.: „assessment of rationality of expenses referred to in principle 1.5” (expenditures spent on sponsorships and charitable activities);
  • Principle 2.11.6.: „information regarding the degree of implementation of the diversity policy applicable to the management board and the supervisory board, including the achievement of goals referred to in principle 2.1.”
  • This are a newly introduced rules – information will be included in the annual report of the SB for 2021.
  • Principle 4.8.: „Draft resolutions of the general meeting on matters put on the agenda of the general meeting should be tabled by shareholders no later than three days before the general meeting.”
  • Principle 4.9.1.: „candidates for members of the supervisory board should be nominated with a notice necessary for shareholders present at the general meeting to make an informed decision and in any case no later than three days before the general meeting; the names of candidates and all related documents should be immediately published on the company’s website;”.

These rules apply to shareholders. After the adoption of DPSN 2021 for application by the EGM of BNP Paribas Bank Polska S.A. on January 4, 2022 (Resolution No. 3), the Bank reports compliance with the above principles.

Bank’s commentary

The Management Board of the Bank hereby declares that the Bank and its governing bodies complied in 2021 with the corporate governance principles determined in the “Principles of Corporate Governance for supervised institutions” and determined in the “Best Practice for WSE Listed Companies 2021” in the scope adopted and reported by the Bank. In the reporting period, the corporate governance principles adopted and reported by the Bank were not violated.

Compliance with laws and regulations

  • 206-1
  • 307-1
  • 417-3
  • 418-1
  • 419-1
  • G-S1
  • UNGC 1
  • UNGC 2

In 2021:

  • There were no pending court or administrative proceedings against BNP Paribas Bank Polska S.A. or BNP Paribas Bank Polska S.A. Capital Group concerning conduct violating the freedom of competition or anti-monopoly regulations.
  • Two substantiated complaints regarding breaches of Customer privacy and data loss were recorded.
  • There have been no reports of non-compliance with regulations and/or voluntary codes concerning marketing communications.
  • The total value of significant penalties imposed on the Bank for non-compliance with laws and regulations in the social and economic area in 2021 amounted to PLN 200 thousand. All the violations occurred when Raiffeisen Bank Polska SA was the depositary of the funds. On October 31, 2018, the core business of Raiffeisen Bank Polska SA was transferred to BNP Paribas Bank Polska SA. Thus, the Bank became, i.a., the depositary for investment funds. Due to legal continuity, the penalties were transferred to BNP Paribas Bank Polska SA.
  • The Bank did not record judicial or administrative proceedings concerning conduct that violates the freedom of competition or anti-monopoly regulations, and there were no complaints, penalties, or sanctions in the area of environmental impact within the organisation’s administrative activities.
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