SGB-Bank S.A. on Groundbreaking AT1 Capital Instrument Implementation in Poland

The financial and banking law experts at SMM Legal have achieved a significant milestone in the Polish market by successfully navigating the process of obtaining approval from the Polish Financial Supervision Authority (PFSA) for the utilization of a novel capital instrument. This instrument involves the classification of subordinated loans granted to the bank as own funds, resulting in a substantial improvement of the bank’s capital ratios. This groundbreaking initiative has not only bolstered the economic potential of cooperative banks but has also directly translated into an enhanced array of modern banking products for the benefit of the banks’ clients.

As a result, SGB-Bank S.A. is the first bank in Poland to leverage the new AT1 capital instrument, with PFSA’s consent, reinforcing the bank’s capitalization and improving the financial leverage and MREL-TEM (Minimum Requirement for Own Funds and Eligible Liabilities) ratios. A total of 164 cooperative banks, comprising 94% of the SGB Group, actively participated in this initiative employing AT1 instruments.

Attorney Adrian Rycerski, PhD, the head of the finance and banking law department at our Firm, highlights the key challenge of crafting agreements and rules to align with the new legislation governing the application of AT1 instruments, which took effect in Poland on 01 October 2023.

‘This success is the result of months of demanding yet exemplary collaboration with our Client, whose operations we have been supporting for more than a decade,’ says Przemysław Maciak, Managing Partner at our Firm. ‘Implementing innovative solutions is ingrained in our team’s DNA. We embrace the challenge of pursuing innovative projects based on new legislation,’ Mr. Maciak adds.

We extend our gratitude to our clients for their trust and the opportunity to contribute to such a fulfilling project!

SMM Legal’s team assisting SGB-Bank S.A. in the process consisted of advocate Adrian Rycerski, PhD, advocate Maciej Tulwin, attorney Jan Stranz, PhD, and Adam Karmoliński, an attorney trainee.

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