banking & finance | In Principle

Receivables as an asset are present everywhere in the business world. This is an asset which could be a problem for some, but at the same time an investment opportunity for others. The aim of this article is to consider how healthy and performing receivables could be used to obtain financing from investors and to discuss how non-performing claims serve as an investment in Poland.

The new Developers Act substantially modifies the rights and obligations of banks in connection with real estate developments. The new regulations significantly increase the scope of rights and obligations of banks, which will entail a greater expenditure of time and effort on their side. Thus the new rules may increase the cost of banks’ participation in the execution of residential developments.

The pandemic has made it hard to organise traditional deal closings. Earlier, in typical financing transactions, it was no problem to arrange a physical meeting of the parties to sign the complete set of financing documentation, including security instruments (e.g. a pledge agreement or agreement to establish a mortgage). Indeed, some clients insisted on holding a traditional closing. The pandemic has changed this perspective, focusing the parties’ attention on the possibilities for remote signing of agreements.

With increasing mobility on the labour market, more and more foreigners from non-EU countries are settling in Poland for economic reasons. As most often salaries are paid by bank transfer, one of the first issues when relocating is to open a bank account in Poland. To keep up with market changes, Polish banks try to make their offers more flexible and adapt them to customers’ current needs. Thus banks offer many services aimed at foreigners, including those from non-EU countries, and banking products are becoming more and more available to them.

Assignment of rights for security is a popular method of securing claims on the Polish market. This is due to the great flexibility of this instrument and the absence of such formalities as registration in court. In short, such assignment consists of transferring to the lender claims held by the borrower against third parties (e.g. receivables for the sale of goods). If the credit is not repaid on a timely basis, the proceeds from the claims assigned for security can be used to satisfy the lender’s claims. But can the rights under a promissory also be assigned in this manner?

Businesses affected by COVID-19 are frantically seeking help. Direct forms of assistance, such as the financial shield and standstill pay, are extremely popular. Meanwhile, another instrument of the Anti-Crisis Shield has begun operating recently, i.e. loan repayment guarantees granted by Bank Gospodarstwa Krajowego to medium-sized and large enterprises from the Liquidity Guarantee Fund. The programme, worth over PLN 100 billion, is designed to encourage commercial banks to grant new loans for liquidity purposes.

In the new economic reality, businesses that took out loans may be asking themselves many questions. Will existing loans still be paid out? Will an expiring credit line be extended? And will the state of epidemic justify not repaying debt already incurred?

On 16 March 2020 the Polish Bank Association (ZBP) published a statement on helpful actions to be undertaken by Polish banks in connection with the COVID-19 pandemic. The statement clearly shows that banks recognise the need to take urgent action in response to anticipated difficulties borrowers will have in performing their obligations. Banks are also assuring customers that such actions will involve introduction of simplified, less formal procedures for assisting borrowers finding themselves in financial difficulty due to the coronavirus pandemic.

One of the most critical issues captivating banks and their retail borrowers in recent years in Poland has been the future of foreign currency loans, especially those denominated in or indexed to Swiss francs. After the political battle around such loans has settled, the issue is now mainly addressed in court proceedings between borrowers and creditors. A long-awaited judgment was issued by the European Court of Justice on 3 October 2019 and has already been followed by judgments of local Polish courts. Putting aside myths and hopes, we look closer at what may be the actual consequences of the ECJ ruling for all interested parties: borrowers and both primary and secondary creditors.

The act of 9 November 2018 amending a number of laws, including the Banking Law, in order to reinforce oversight of the financial market entered into force at the beginning of this year. A new chapter was consequently added to the Banking Law concerning forced acquisition of banks coordinated by the Polish Financial Supervision Authority (KNF). The act has now been in force for several months, and it is a good occasion to examine in more detail the new powers vested in KNF.

On 5 March 2019, a legislative proposal was submitted to the Sejm to regulate business activity conducted from the United Kingdom of Great Britain and Northern Ireland and Gibraltar following Brexit. Similar laws are now being drawn up in a number of other EU countries. The bill is intended to protect Polish customers who have agreements with institutions of that kind. It is also intended to enable the firms to bring their business activities and relationships with customers to a close in an orderly fashion, or take the appropriate measures to remain on the Polish market according to rules that apply to third countries.

A lot has been published on the harmful effects on the construction industry of the legal solutions proposed in the draft Act on Prevention of Abuses in Road Projects. A disadvantage of the concept of protection of local subcontractors presented by the Ministry of Justice may be to severely limit the General Directorate for National Roads and Motorways’ external financing of projects.