Policies and principles

The primary document governing ethics at PKO Bank Polski is the Code of Ethics. It supports the prevailing organizational culture within the bank. It promotes the bank’s values, which include credibility, customer satisfaction, entrepreneurship, and continuous improvement. According to these values it applies to all employees, regardless of their position or role. In addition to the Code of Ethics, bank adheres to the Banking Code of Ethics (Principles of Good Banking Practice) of the Polish Bank Association.

The scope of application of the Code of Ethics includes the following: the bank's relations with customers, relations among the employees, the bank's approach to cooperation with counterparties, and the bank's activities beyond the business area. The Code of Ethics and Work Regulations contain provisions concerning, among others, combating discrimination based on gender, age, disability, religion or belief, sexual orientation, race, ethnic origin, nationality, political beliefs, union membership, or type of employment.

In practical terms, the code serves as a tool to promote and implement implementation  ethical values within the bank. Its provisions are binding for all the employees as well as to all individuals performing business activities for or on behalf of the bank or act as intermediaries in the bank’s operations. According to the bank’s Work Regulations, every employee of the bank is obliged to observe the Code of Ethics. Initiatives are organized to promote the Code of Ethics and the bank’s values.

In addition to the above-mentioned matters, the bank’s Code of Ethics and Work Regulations also address matters such as refraining from using confidential information for personal purposes, abstaining from actions that would conflict with official duties, prohibiting mobbing, combating corrupt practices. An ethics module is included as part of the induction training for new employees. To prevent ethical breaches within the bank, internal regulations regarding anti-bullying and anti-discrimination principles, as well as handling of complaints regarding infringements of employees rights, are enforced. The bank also conducts analyses to detect conflicts of interest and non- compliance issues. Employees report any potential violations to designated channels. Doubts raised by employees regarding ethics are promptly addressed.

In December 2023, the Bank amended the Code of Ethics by resolution of the Management Board, and in January 2024, the Supervisory Board approved the amended Code. The Bank has revised and redefined the applicable values. Three key values have been introduced for the successful implementation of the Bank's mission and strategy:

• partnership - together we care about the best customer and employee experience, we build partner relations based on mutual respect, openness and trust,
• growth - we embrace change and take on ambitious challenges, we nurture our own growth and support others in doing so, we offer support to customers to grow in a rapidly digitalising world,
• impact - we act boldly, value proactivity, responsibility and commitment, are innovative in creating solutions and effective in achieving goals.

In 2023, the Bank conducted training activities aimed at all bank employees and managerial staff. These trainings covered issues crucial for promoting ethical behavior within teams, such as building relationships, identifying emotions, stress coping, motivating employees and managing a team in changing environments. All newly hired employees receive information about the bank’s values and Code o Ethics within first days of work as a part of the onboarding process.

[GRI 2-16]  Within the realm of employee area, the bank has established mechanisms to foster and oversee adherence to ethical principles. These mechanisms encompass monitoring protocols designed tot identify instances these principles, especially those potentially determinantal to stakeholders, business partnerships, and societal interactions. These mechanisms rely on internally devised complaint procedures, the Code of Ethics, and reporting duties to the Management Board and Supervisory Board.

In 2023, no significant concerns regarding the organization’s negative impacts on stakeholders, including business relationships, were identified or reported to the Management Board and Supervisory Board in the employee area.

Within the context of the anonymous reporting system for violations to the Management Board, neither the Management Board nor the Supervisory Board received information indicating irregularities resulting in a critical impact on the organization’s stakeholders.

The fundamental objective of the bank’s information policy is to guarantee high standards of communication with participants in the capital markets, which reflects the principle of providing universal and equal access to information. The Investor Relations Department is responsible for implementing the information policy in practice.

The Bank communicates with the investors directly, by organizing online performance meetings, by participating in a wide range of investor conferences and bilateral meetings, and through its activity on the corporate website, which has a dedicated investor relations section. The website contains key information on the Bank and the securities issued, including the information on the Bank’s strategy, financial statements, presentations, key financial data in a format that allows its direct use, contact details and other information which is usually published by companies, in accordance with the relevant recommendations.

When communicating with the market, the bank takes into account the interests of all investors, as long as they do not conflict with the interests of the bank. The bank conducts its information policy in a manner that guarantees a proper, reliable and complete access to information to all investors without any preferential treatment of any of them. The guarantee of an equal access to information for each shareholder relates to the bank's information activities in accordance with the applicable laws, in particular the provisions of the Commercial Companies Code, the MAR Regulation, the Act on Trading in Financial Instruments, the Public Offering Act (...), the regulations on current and periodic information (...). The above rules were formally adopted by the bank in the Principles of information policy of PKO Bank Polski S.A. regarding communication with investors and clients. The bank's information activities also take into account the higher standards of the Best Practices of Companies Listed on the WSE 2021 and the Principles of Corporate Governance for Supervised Institutions. The fulfilment of disclosure obligations is subject to an assessment of compliance by the Supervisory Board on an annual basis and is presented in Supervisory Board's annual report.

ESG states one of the pillars of PKO Bank Polski S.A.'s strategy for the years 2023-2025. The Bank's ESG strategy includes a set of metrics in three areas of sustainable development: environmental, social and corporate governance. Information about the ESG targets included in the 2023-2025 Strategy is available on the Bank's website: Strategy of PKO Bank Polski S.A. na lata 2023-2025 (pkobp.pl).

The Dividend policy takes into account the Bank’s intention to provide stable dividend payments in the long term, in accordance with the principle of prudent management of the Bank and the Bank's Group.

The objective of the Dividend policy is to optimize the capital structure of the Bank and the Bank's Group, while considering the return on equity, the cost of capital and the capital needs for development, and maintaining an appropriate level of the capital adequacy ratios and meeting the minimum requirement for own funds and eligible liabilities (MREL).

In line with the adopted Dividend policy, an additional tool for capital redistribution is the purchase of own shares aimed at their redemption. The Dividend policy indicates that the General Meeting shall consent to the acquisition of own shares by the Bank, after prior approval of the Supervisory Board, specifying the terms of the acquisition, including the maximum number of shares to be acquired, the period of authorization to acquire shares, which may not exceed five years and the maximum and minimum amount of consideration for the acquired shares, if the acquisition takes place for consideration. Purchase of own shares for redemption in each case requires the Bank to obtain the prior consent of the Polish Financial Supervision Authority.

In December 2023, the PFSA adopted a position on the 2024 dividend policy of supervised institutions.

The Bank’s intention is to pay dividend in 2024 based on the 2023 net profit. The Bank Management Board wil determine its dividend recommendation upon receiving an individual recommendation from the Polish Financial Supervision Authority regarding the dividend policy. Purusant to Article 395 § 2 point 2 of the Commercial Companies Code, the decision regarding profit distribution falls within the competence of the Ordinary General Meeting of the Bank.

More information on the amount of dividends paid historically can be found in the Shares and dividends section.

Security policy defines the basic principles for maintaining an appropriate level of security at the bank, including preventing and managing the security incidents, as well as building and implementing the necessary security mechanisms. It also refers to the bank's business continuity management, developed in accordance with the generally applicable laws and international standards. The policy also covers the coordination of supervision over performance of the activities entrusted to the external entities for the bank (other than agents and intermediaries).

In accordance with the adopted policy, the bank exercises due diligence in counteracting crimes related to its activities and shapes the desired behaviors of its employees in the event of a suspected crime, while maintaining the highest corporate standards in this regard. The bank does not tolerate any offences in connection with its activities. The requirement to exercise due diligence covers a range of activities to prevent crime and abuse, report any suspicion of crime having been committed, conduct investigations in matters that may have financial or reputational consequences for the bank, and ensure that its activities are conducted in accordance with the applicable laws. It applies to all employees of the bank, to entities and contractors that work on its behalf and employees of companies that cooperate with the bank, regardless of the scope and form of such cooperation. Security issues in specific areas are further determined in the bank’s additional internal regulations, such as those regarding the protection of people and property, the IT system security and the management of security incidents.

In order to improve the procedures for counteracting offences in the bank, the Departments of Security and Cybersecurity conduct cyclical analyses of potential security threats, and present their conclusions to the Management Board and the Supervisory Board together with the recommendations regarding the implementation or modification of the specific solutions, including the security mechanisms. The supervision of the policy’s implementation is exercised by the President of the Management Board, while the directors of the Security and Cybersecurity Departments are responsible for the policy’s implementation in practice within their respective competences.

In 2023, mechanisms were implemented to detect and prevent vishing attacks, which consist of attempts to impersonate the Bank's call centre and thereby persuade the Bank's customers to execute fraud scenarios.

In 2023, the Bank was improving systems for incident, anomaly and advanced malware detection and a large number of actions relating to incident handling was automated. The technology stack of solutions used for computer forensics purposes was replaced. It ensured the technological validity of the solutions used for computer forensics purposes in accordance with the current requirements profile.

Under the generally applicable provisions of law and in order to meet market expectations, candidates for the Supervisory Board membership are subject to an assessment of their suitability.

Policy concerning the assessment of suitability adopted by the General Meeting was formulated to determine a candidate's unblemished reputation and appropriate level of knowledge, individually or jointly with others, of the bank's activities and risks related to those activities, as well as the skills and experience for the performance of his/her duties.

Suitability includes integrity, ethical conduct and independence of judgement of each person, and the ability to devote sufficient time to perform all duties. The policy sets out the principles and criteria for the assessment of suitability, its supervision and monitoring, and the succession planning.

The bank introduced provisions that set the directions for selecting, appointing and planning for succession, including staff resources and assessing suitability of the Management Board members and persons having key functions at the bank. They are assessed in terms of their competence, knowledge and skills, adequacy of experience for the position and reputation defined as sufficiently unblemished opinion, honesty and ethical behaviour.

As a result of these regulations, the Supervisory Board decides on the selection and assessment of the Management Board members, while the Management Board follows a similar procedure for the assessment of the Material Risk Takers (MRTs). More information on the diversity of the bank's governing bodies by gender, age and experience can be found in the Diversity management section.

Following the annual review of the Management Board Suitability Policy, in December 2023 the Bank's Supervisory Board adopted amendments to the provisions of the Diversity Policy regarding: •specifying the deadline and method of achieving the gender diversity objectives on the Management Board by assuming that the target achievement of at least a minimum level of gender diversity (i.e. 30%) in the composition of each Bank's Management Board should take place starting from the appointment of the Bank's Management Board for a new joint term after 31 December 2025, and that the achievement of this target will be achieved by applying the principle of equal opportunities in the selection of Management Board members and fostering a culture of diversity in the organisation.

Equivalent changes to the diversity policy for members of the Bank's Supervisory Board are planned for 2024.

As part of the Policy on the assessment of suitability of candidates for the Supervisory Board membership adopted by the General Meeting, such suitability is established and implemented by taking into account the principle of diversity in composition of the Supervisory Board. It ensures an appropriate appointment of the Supervisory Board members, and the representation of a wide range of competences, knowledge and skills, adequate to the positions held. It guarantees that the Supervisory Board members – individually and as a body – issue independent opinions and decisions about the bank's activities.

The objective of our marketing, public relations and social communication activities is to:

• strengthen the bank's market position and its brand,
• create a consistent image of the bank, the entities of the Group, and the Foundation of PKO Bank Polski,
• initiate and implement initiatives to build awareness of the bank’s brand among its stakeholders and in the social dimension.

Aligned with the adopted strategy, the bank develops relations with the local community by actively conducting activities for the benefit of society and with its participation. It supports educational, civic, cultural and sports events and projects.

Charity activities are carried out on behalf of the bank by the Foundation of PKO Bank Polski.

The bank and the foundation in their respective sponsorship and charity activities verify every beneficiary of the support they provide. Care and due diligence in ensuring rationality of the sponsorship and charity policies is also achieved through a synergy of the activities of both institutions. This falls within the scope of responsibilities of the foundation's Program Council, which is composed of the representatives of the bank. In particular, the bank and the foundation implement projects separately or jointly in the most important program areas, i.e. those that have an impact on the institutional brand image such as culture, tradition, education and sport. The scope of the foundation's activities is specified in its Articles of Association, while the principles of cooperation between the bank and the foundation are regulated by an agreement between both institutions.

Such division of involvement in program areas strengthens the bank's image benefits and allows to broaden the spectrum of the pursued activities.

The bank's sponsorship policy contains a multi-stage process for reviewing and accepting the submitted applications. Pursuant to the bank's Articles of Association, the conclusion of a sponsorship agreement with a net value exceeding PLN 500 000 per annum requires an approval of the Supervisory Board. As a result, any leading sponsorship projects are presented for evaluation and decision of the Supervisory Board.

An important stage in the process is an expert assessment that takes into account: the project’s importance, its business or brand image potential, the organizer's credibility for ensuring an appropriate level of project implementation, the business environment in which the bank acts as a sponsor, and the budget availability. Applications that are positively assessed are presented to the Sponsorship Committee, which guarantees a factual and comprehensive view of the proposals.

Annual assessment of the justification of the expenditures incurred by the bank and the Bank's Group to support: culture, sport, charitable institutions, media, social organizations, trade unions is subject to Supervisory Board's assessment on an annual basis (as part of the report to the Supervisory Board of the Sponsorship Committee).

The entity conducting an audit of the bank's financial statements is selected by the Supervisory Board of the bank upon a recommendation of the Audit Committee. The specific tasks of the Audit Committee include developing the policy and detailed procedures for selecting an audit firm, as well as presenting the recommendations to the Supervisory Board for the policy’s adoption. In accordance with the resolution of the Supervisory Board, the bank applies the following policy:

1. The maximum uninterrupted duration of statutory audit engagements carried out by the same audit firm or by an audit firm associated with that audit firm or by any member of the same audit network operating in the European Union, is 10 audited financial years. Such maximum uninterrupted duration of engagements may be extended by two years up to a maximum of 12 audited financial years, upon the consent of the Polish Financial Supervision Authority in case of a simultaneous engagement of more than one audit firm in a joint audit, and on the condition that a joint audit report will be delivered as a result of the joint audit.
2. An audit contract is concluded for an audit period of no less than 2 financial years and no more than 3 financial years, with the possibility of extension for the subsequent audit period of at least two financial years.
3. Following the end of the maximum uninterrupted duration of statutory audit engagements, referred to in point 1, the audit firm may again conduct the statutory audit of the financial statements, provided that at least 4 years have lapsed since the completion of the previous audit of the financial statements of the bank and its group.
4. The key statutory auditor cannot perform the statutory audit of the financial statements for a period of more than 5 audited financial years.
5. The key statutory auditor may perform the statutory audit again provided that at least 3 years have lapsed since the completion of the last statutory audit of the Bank’s and the Group's financial statements.

The main obligations for the bank with respect to anti-money laundering (AML) and combating the financing of terrorism (CFT) include: analysis and assessment of the risk of money laundering and terrorist financing of each client that establishes cooperation with the bank, registration of transactions that are suspicious and above a certain threshold, analysis of all transactions approved and carried out by the bank, withholding transactions or blocking the client's account and freezing available assets for transactions conducted by a party included on a list of sanctions.

The AML policy is one of the internal procedures defining the scope of the transfer of data, regulations, obligations, standards and measures used to prevent money laundering and financing of terrorism. The Bank and the group companies develop, implement, update and enforce the internal AML regulations. 

In 2023 internal AML/CFT procedures were also revised. The Bank's Management Board updated the Principles for Counteracting Money Laundering and Terrorist Financing at PKO Bank Polski S.A., defining the procedure and division of responsibilities with regard to AML/CFT. In November 2023, the Policy on Counteracting Money Laundering and Terrorist Financing (hereinafter the "Group Policy") was also updated for all entities of the Bank's Group and foreign branches, with the aim of strengthening the supervision of the duties performed in terms of AML/CFT in these entities. The policy sets out standards that should be followed by the bank and its subsidiaries and all persons working in those entities, including any permanent and temporary associates, consultants, contractors, external agents and their employees. 

The group applies financial security measures before establishing a business relationship with a Customer and then reapplies them during the relationship at the intervals adequate to a given Customer’s risk.

In 2023, PKO Bank Polski S.A. implemented, on an ongoing basis, the restrictions and changes resulting from the sanctions imposed on Russia and Belarus and introduced, on an ongoing basis, guidelines for the financing of and providing banking services to persons and entities having business dealings with Russia and Belarus, including those customers on whom sanctions have been or can be imposed.

The Group operates in accordance with the laws of each country in which it conducts its activities and cooperates with institutions which are tasked with preventing money laundering and financing of terrorism (the General Inspector of Financial Information in Poland and the relevant financial analytics institutions for the foreign branches).

Changes were also made to the organisational structure to strengthen the continuity of the Bank's handling of the critical AML/CFT process by conducting ongoing and post-analysis of suspicious transactions after they have taken place and findings for authorised parties.

Principles for ensuring compliance and managing non-compliance risk and procedural risks at PKO Bank Polski define the compliance policy, which relates to preventing illegal activities, ensuring information security that includes protection of customer data, creating advertising and marketing messages, adopting ethical standards, preventing conflicts of interests, enforcing anti-corruption and bribery procedures, rules for accepting gifts and gifts, and handling of complaints and customer appeals. The principles frame the responsibility for compliance and procedural risk management, and define frameworks for reporting those risks.

When formulating the terms of the product offer and in the process of selling the products, the group's entities make every effort to ensure that the products are adequate to customer needs, while the form of a purchase offer adequate to the product's nature. Before concluding an agreement, we provide reliable, transparent and comprehensive information to our customers about the product, in particular regarding the risks and benefits resulting from the purchase and all costs related to the conclusion, performance and possible early termination of the agreement.

With regard to the principles for counteracting corruption, the bank applies a number of internal procedures aimed at preventing the creation of an environment conducive to committing offences specified in Art. 229, 230a, 296a and 305 of the Criminal Code (actions of corrupt nature) by entities related to the bank. These rules are specifically aimed at preventing the creation of mechanisms that incentivize material or personal benefits, preventing decision making under the influence of such actions and conflicts of interest, and familiarizing the entities associated with the bank (i.e. members of the Management Board and the Supervisory Board, employees of the bank and the group’s companies and other entities that provide services to the bank) with the principles of criminal liability for corruption offences.

The bank's Employment regulations are based on the principle that each employee is important regardless of their gender, age, disability, religion or faith, sexual orientation, race, nationality, political beliefs, trade union membership, ethnic origin or type of the employment contract. The employer obliges itself to counteract discrimination and mobbing in employment, to guarantee equal treatment of employees performing the same work or work of an equal value, and to apply objective and fair criteria for assessing work results.

The regulations further indicate the employer's obligation to organize work in a manner enabling all employees to achieve high productivity and quality of work while using their qualifications and talents, as well as to provide employees with the working conditions in accordance with the provisions of the Organizational Health and Safety, and the provisions of the Labor Code. The bank's employment regulations also define duties of the employees such as diligent performance of professional tasks in accordance with the applicable internal regulations, including those contained in the bank's Code of Ethics. Each employee is obliged to comply with the security rules of the information system and special protection of data contained therein, and to take care of the property entrusted to the employee, as well as participate in regular health and safety trainings. The employee should also identify the circumstances that could lead to or may result in a conflict of interest, fulfilling their obligation to disclose such instances to their supervisor and the Compliance Department for further investigation.

Each employee is obliged to comply with the Bank’s Code of Ethics and participate in the development and promotion of the organizational culture and the related values.

The group also applies recruitment principles based on the highest standards for counteracting discrimination and ensuring personal data protection with the use of the modern technologies and information systems. In the recruitment process, the bank and the entities of the group care for human rights and ensure equal opportunities, guided by the objective to acquire the best external candidates, while simultaneously promoting the internal talents. This approach ensures employment of people with diverse professional experience and skills. The bank encourages all employees to take part in internal recruitment within the group's entities as part of their professional development in other business areas. In order to ensure positive experience of candidates in the recruitment process, the bank diversifies the channels it uses to reach different groups of candidates, reducing the recruitment time or using the latest selection methods. At the same time, research on the candidate experience is conducted whose results are used to improve the recruitment process.

Remuneration policy for employees of the Bank and entities of the Group aims at ensuring a coherent remuneration system that takes into account the adjustment of mechanisms and levels of remuneration to the individual job groups and the local labor market conditions, as well as the economic and financial situation of the bank and the group’s companies.

The policy ensures consistency in remuneration by shaping the remuneration system on the basis of work achievements and results, and assessment of employee competencies, building employee responsibility for the tasks they perform upon objective criteria, setting fixed salaries following the valuation of jobs and adjusting such mechanisms, tools and levels of remuneration to the strategy and goals of the organization. The policy foresees parameterization of the variable remuneration components to account for the bank’s and the group’s cost of risk, cost of capital and liquidity risk in the long term. It also presumes such monetary or non-monetary forms of remuneration that do not encourage employees to favour their own interests or the interests of the bank and other group entities to the detriment of customers.

The Bank's Supervisory Board is responsible for adopting and updating the policy, in particular monitoring that the remuneration policy and practices are properly implemented and aligned with the overall corporate governance framework, corporate culture, risk appetite and related management processes. The information policy is subject to an Assessment of functioning by the Supervisory Board on an annual basis. The implementation of the remuneration policy is also subject to an independent internal review by the bank's Internal Audit unit. The report from the review is presented to the Supervisory Board and the Remuneration Committee.

Principles of organization and implementation of development activities at PKO Bank Polski define the principles of organization and conditions under which development activities are carried out for the benefit of the bank's employees. 

Development activities are adjusted to the specific nature of the Bank and the individual entities of the Bank’s Group and regulated by internal regulations. It guarantees a flexible approach to the development policy. “The method of organisation and implementation of development activities at PKO Bank Polski S.A.” sets out the goals, directions and activities of the Bank in the area of management of the development of the Bank’s employees or other co-workers.

The main assumption of the adopted training policies is:

• supporting the pursuit of the strategic goals of the entities of the Bank’s Group and the business objectives,
• onboarding of new employees,
• ensuring the upgrade of professional qualifications of the employees and adapting their knowledge and skills to the changing requirements of the market in which a given entity operates,
• preparing the employees for the implementation of new solutions and products offered by entities of the Bank’s Group and/or for introducing changes to the existing solutions and/or products offered.

The implementation of development activities results from the business objectives of the bank's unit (business development activities), business goals of the entire bank (strategic development activities) and the bank's obligations resulting from generally applicable laws and recommendations, guidelines, recommendations of supervisory authorities for the banking sector or decisions of the supervisory authority issued in relation to the bank (obligatory development activities).

The Bank updates the List of Training Courses every quarter and communicates it on the intranet portal. The list contains a number of development activities for employees and managers. It contains a description of individual activities and an easy to use tool for signing up for individual training sessions. In addition, the Training Catalogue has gained a new form of publicly available video training courses in 2023, expanding soft skills and implementing topics on the most recent development trends.

In 2023, the #ESGo development program was launched. The program aims is to educate all employees on sustainable development. Building both core and expert competencies in the field of ESG is intended to enable the effective transformation of the Bank’s ESG practices. In 2023, 293 employees participated in ESG training sessions, with 1,923 employees participating in online meetings.

The bank strongly opposes all forms of discrimination, intolerance, and other behaviors that are inconsistent with the organization’s values and promotes among its employees attitudes based on mutual respect. Any underlying mobbing behaviours are not accepted. The bank has internal regulations that include the principles for counteracting mobbing and discrimination, as well as a procedure for handling complaints regarding violations of employee rights.

These principles guarantee the prevention of adverse phenomena in employees relations and determine the manner of responding to interpersonal conflicts. Based on these principles, the bank’s employee may file a complaint against violations of employee rights without any fear for the consequences as defined in the provisions of the generally applicable law and the internal regulations. Each employee has the right to receiving an additional support in the process of investigating the complaint with the possibility to appoint a representative of the trade union organization or an employee representative appointed in accordance with the bank's internal regulations to participate in meetings with the employee's or to submit an opinion on the merits of the complaint. An ongoing support in employment matters is offered by the HR Contact Center, allowing employees to obtain an up-to-date information on the procedure for submitting complaints and anonymous reports about violations of employee rights.

Complaints regarding the broadly-understood breaches of employee rights are considered on an individual basis. For each of them an optimal consideration method is determined to formulate the appropriate conclusions and recommendations or to take additional actions or staff decisions. Various verification methods are used in the course of investigation of the submitted complaints (e.g. anonymous questionnaire surveys, in-depth interviews with employees, verification of turnover rates and other HR data). Each time sufficient care is taken to ensure the highest possible objectivity of the assessment, hence the participation of the representatives of various units in accordance with the organizational structure of the bank.

Other entities of the Bank's Capital Group also have their internal regulations that describe the necessary solutions to ensure compliance with the applicable law for counteracting mobbing and discrimination, adopted either as separate regulations or through relevant provisions contained in the work regulations, codes of ethics or other relevant documents for a given entity.

The basic internal regulations on procurement are as follows: Procurement Policy, Rules for the purchase of goods and services, Procedures for the purchase of goods and services and Code of Ethics for Suppliers and Bidders.

The Procurement Policy was adopted by a resolution of the Bank's Management Board in October 2023, replacing the previous procurement policy introduced by a decision of the Director of the procurement department.

The aim of the Procurement Policy is to ensure the efficient and sustainable development of the Bank. The Procurement Policy applies to all purchases of the Bank. It introduces procurement standards, establishes procurement objectives, and defines good and bad procurement practices.

Among the purchasing standards, the Policy introduces the obligation to take into account environmental, social and corporate governance (ESG) objectives when evaluating bidders and suppliers. The Policy sets the following as procurement objectives: quality, efficiency and development (aiming to optimise functional requirements while minimising the life-cycle costs of goods and services).

As best practice in the procurement process, the Procurement Policy recognises, among other things, a fair evaluation of offers consisting in:

- evaluation on the basis of the criteria adopted (including ESG), assessment weights, and provided documents and information,

- an appropriate distinction between elimination criteria and evaluated criteria,

- application of criteria related to the need addressed and relevant to the selection,

- objectivity of evaluation

- avoidance of unjustified preference assessments.

In 2021, the Bank’s Management Board adopted and the Supervisory Board approved the Tax Strategy of the Bank as an entity operating in a responsible and transparent manner. The Tax Department Director is obliged to review the Strategy at least once a year and, if necessary, to present recommendations for updating or revising it.

The tax strategy contains the following tax objectives of the Bank with a brief description on how to achieve them:

• fulfilling tax obligations in accordance with the binding regulations;
• acting in compliance with the intentions of the legislator;
• applying the arm’s length principle in related party transactions;
• active involvement in legislative initiatives;
• mitigating the tax risk;
• maintaining high standards in relations with tax authorities;
• using modern technologies in fulfilling tax obligations.

In accordance with the statutory obligation, the Tax Group of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna (hereinafter: the TG), which consists of: the Bank, PKO Bank Hipoteczny S.A. and PKO Leasing S.A., has prepared Information on the pursued tax strategy for 2020 and Information on the pursued tax strategy for 2021. The Bank’s Tax Strategy and the Information on the pursued tax strategy for 2020 and 2021 are available on the Bank’s website (https://www.pkobp.pl/pkobppl-en/about-us/tax-strategy-of-pko-bank-polski-sa/).

Having regard to the documents referred to, in the Bank’s activities attention is paid to, among other things:

• implementing and applying internal regulations which ensure the correct fulfilment of tax obligations and correct documentation of transactions

The Bank’s Management Board has adopted resolutions on: the principles for fulfilling tax obligations, reporting tax schemes (MDR) and meeting transfer pricing obligations. Based on the above resolutions, decisions were issued on: the tax settlements of the Bank as a taxpayer and tax remitter (including those relating to the Bank’s foreign branches), fulfilling information duties, reporting tax schemes (MDR), fulfilling transfer pricing obligations, fulfilling the obligations arising from the FATCA and CRS. The internal Bank’s regulations are reviewed and updated regularly to ensure their compliance with the generally applicable laws.

• oversight and control over the fulfilment of tax obligations, including the internal control system

Managing the fulfilment of the Bank’s tax obligations:

1. a) A Vice-President of the Management Board exercises oversight over the Finance and Accounting Area, including the Tax Department;
2. b) The Tax Department, together with other relevant Bank units, is responsible for fulfilling tax obligations and ensuring that the tasks relevant to the Bank’s tax obligations are properly performed by other units of the Bank;
3. c) The high quality of the tasks performed is ensured by the expertise of the Bank’s employees, including its tax advisors;
4. d) The Bank also hires external tax advisors;
5. e) The process of fulfilling tax obligations is covered by the Bank’s internal control system.

• mitigating the tax risk using the Bank’s risk management system

The Bank’s tax risk management mechanisms and principles:

1. a) The Bank regularly analyses and minimizes its tax risk using instruments permitted by the generally applicable laws and regulations. Among other things, the Bank seeks to obtain individual tax rulings and advance opinions.
2. b) The Bank has a low tax risk appetite. The Bank limits the activities in which it is not possible to eliminate the tax risk using tools permitted by law.
3. c) Fulfilment of the Bank’s tax obligations is a separate process which is subject to assessments from the perspective of operational and compliance risk, among other things.

• avoiding structures used for aggressive tax planning or tax evasion (including tax havens) and avoiding solutions that are contrary to the intention of the legislator or the spirit of the law (the principle of tax honesty)

The Bank does not engage in tax planning based on regulations which allow the artificial or ostensible lowering of the effective tax burden. Before deciding to engage in a specific activity, the Bank performs a risk analysis with regard to the general anti-avoidance rule (GAAR) and the specific anti-avoidance rules (SAAR).

• promoting tax awareness among employees

The Bank’s employees are informed of the applicable tax law, its planned amendments and interpretations. The Bank prepares specialist training and guidelines for its employees, as well as analyses of the tax implications of new products, the Bank’s business processes, investment projects, and contracts.