I. Questions concerning resolutions on payment of a dividend for 2008 and an increase of the share capital of the Bank 1. What motivated the Bank's Management Board between December 2008 and June 2009 to change its decision on paying a dividend? First of all, December was two-and-a-half months after the collapse of Lehman Brothers. For everyone analysing the financial and capital market, that was the second event heralding a global financial crisis (the first was on 9 August 2007). After September 2008 the financial world changed and very few banks could decide to enter the capital market, apart from emergency share issues. After 15 September 2008 the capital markets ceased to exist. Currently, a growing number of financial institutions are entering the market for additional capital, and these are not emergency issues - we're out of that earlier period. Better and better institutions are gathering more and more money from the capital market because it is returning to normal, and there is no reason why PKO BP should not be in the ranks of the best institutions in the world which can afford to enter the capital market to obtain money from it. 2. How does the Bank intend to use the revenues from the share issue? The goal of the project was to strengthen the Bank's capital by about 2.1 billion zlotys. This reinforcement can be implemented in various structures, and in a moment there will be discussion on a different structure (announced by the State Treasury), but the net effect will probably be identical. The capital strengthening of PKO BP as a leading institution on the Polish market, further additional strengthening, is absolutely in agreement with the strategic goal of the Bank and will allow it to compete even more effectively than it has up till now. 3. What has been the financial situation of PKO BP since the end of 2008? The worst economic forecasts are for the third quarter of 2009, which is at the moment when the dividend is to be paid. Does this make sense at a time when the situation on the financial market is deteriorating? Will the Bank manage to raise capital at that time, since an increase in capital in this situation may not be justifiable economically? It seemed to the Management Board that in such a particular situation it was possible, in a rational manner, to carry out this transaction. Credit operations would not suffer. As to risk management, the Bank conducted a comprehensive risk analysis (and here I can reassure all shareholders) supported by various stress tests, analyses of sensitivity in connection with the depreciation of the zloty, the increase of bad credit and the growth in credit operations overall. The natural buffer which exists in the solvency ratio is the profit for 2009, which will be entered in the Bank's books in September when we will have the audited financial statements for the first half of 2009. 4. Given the diametrical change in the situation after the announcement of amendments to the resolutions by the Ministry of the State Treasury, I have a question: does the Management Board of the Bank, which is the executive body for resolutions of the General Meeting of Shareholders, see the necessity of an issue which is much lower than that in the initial plan? Will the funds from such an issue be needed by the Bank at all? It is in the interests of the Bank, its shareholders, its customers and the economy to strengthen the capital of PKO BP. Accordingly, when we speak of a share issue, of the principle of a capital increase, then, in the context of 2009, in the context of the collapse in financial markets, in the context of the challenge the Polish economy faces in 2010, I find no convincing arguments against increasing the capital of PKO BP. Equally, there is no doubt that PKO BP is an exceptional institution which is capable of carrying out a share issue and raising capital. If this project is completed successfully - the project of a capital increase in general - then we will be able to speak of an additional strengthening of PKO BP's prospects for development. This will allow the Bank to compete even more effectively on the domestic market, to have a very favourable security ratio, to have the potential to finance the economy and credit operations, as well as to operate on the financial market in a way which is flexible. That transaction can be implemented in a different structure. The Bank can have two billion zlotys net at the end of the process by paying out a smaller dividend and increasing its capital by a smaller amount. The net effect is similar. Statement by the spokesman for the Minister of the State Treasury, Mr. Tomasz Zganiacz, Director of the Department of Financial Institutions in the Ministry of the State Treasury The variant proposed by the Ministry of the State Treasury has come to be recognised as one which will make possible the simultaneous further development and security of the Bank within existing constraints. I am not able, nor would I like at this moment, to go into detailed analytical considerations as to what amount and why, because the hard work of a large number of people has gone into this variant. At this moment, given time constraints, I would not be able to present all the particulars of the analyses which have been carried out. II. Further questions 5. In the situation where there is an increased risk in connection with operations in Ukraine, does the Bank intend to withdraw from the Ukrainian market? The Management Board of the Bank was appointed on 20 June 2008, and since then our attention has been focused on Ukraine. We have carried out a very thorough restructuring of Kredobank's corporate bodies. We changed its management board and its supervisory board. With the support of the auditor, we conducted independent analyses of the quality of its credit portfolio, from which it transpired that it was in a state far worse than had been supposed. The Bank conducted a special audit of the credit portfolio of Kredobank at the end of 2008, and the auditor suggested an amount of secure reserves which we should create. Kredobank was the first foreign bank in Ukraine to carry out a full reservation of its credit portfolio. Let no one think that Ukraine is a simple project. It is a challenge for PKO BP, which we are meeting with the greatest possible diligence and engagement, building up our presence on the Ukrainian market in every way possible. In recent months we have seen an improvement in Kredobank's liquidity and a visible growth in deposits. We are one of the few banks in Ukraine which has never suspended payments, and we are a bank that has earned the trust of the region in which it is focusing its operations. Conducting banking operations in Ukraine is a very complicated business which the Management Board has approached with the utmost care, and which it has restructured from the very beginning. Ownership supervision over the company has been greatly tightened, and a comprehensive restructuring is under way, as a result of which employment in Kredobank has dropped by almost six hundred full-time jobs in this short period of time. 6. Should we not be fearful that the write-downs created by the Bank in connection with the anticipated worsening of the economic situation have been too low? In the whole of 2008 we created net write-downs in the amount of 1.149 million zlotys, whereas in 2007 the total was not quite 45 million zlotys. I want to say that we are now dealing with a different configuration of variables. This is a bank which has not only increased its profitability, its net profit. If we had gone through such technical exercises, if we had made write-downs at about the level of 2007, the profit would have been sky high. PKO BP is a bank with good reserves in the face of the dangers and challenges which lie ahead of us in 2009 and 2010. The authorities of the Bank did not give answers to detailed questions in consideration of the fact that PKO BP is a public company and must adhere to the principle of equal access of all shareholders to information, and that, pursuant to Article 428 par. 2 of the Commercial Companies Code, the Management Board should decline to give information in cases where this might cause harm to the company or an affiliated company through the disclosure of technical, commercial or organisational secrets of the enterprise.
