The seminar guests were welcomed by the Chair of Komisja Nadzoru Finansowego (KNF), dr hab. Jacek Jastrzębski, prof. UW, and prof. Leszek Pawłowicz, Coordinator of the European Financial Congress. The event brought together a large number of representatives of institutions forming the financial security network: the Bank Guarantee Fund, the National Bank of Poland, the UKNF, and numerous representatives of the financial sector, including the Warsaw Stock Exchange. 

The Chair of the KNF observed that the joint Seminar initiative had gained popularity and was enjoying interest from the market. He noted that financial bonds, which are the topic of this year’s seminar, required a creation of an appropriate environment for issuers and investors, which was key for their development. The Chair of the KNF used the occasion to inform the participants that the Long-term Financing Ratio (PL: Wskaźnik Finansowania Długoterminowego, WFD) was in the final stage of regulatory work and ‘will soon become part of our regulatory and supervisory landscape’.

Next, the Coordinator of the European Financial Congress, prof. Leszek Pawłowicz, took the floor and said that the Long-term Financing Ratio was a good internal dictate for banks, aimed to limit the high risk of mismatch in the maturity structure of  assets and liabilities of the Polish banking sector.

In his presentation, prof. Kamil Liberadzki from the UKNF introduced the audience to the characteristics of the financial bonds market and its meaning for the development of the financial sector in Poland. He pointed out challenges faced by the Polish financial market, such as the possibility to rely on financial institutions for financing of Poland’s development or the resulting need to increase the issuance of bonds to cover the rising capital and liquidity requirement. He observed that the national market of bonds of financial institutions  might require a certain unblocking, opening it to the foreign capital.

Ludwik Kotecki from the Monetary Policy Council introduced the listeners to the organisation of the financial bonds markets. Referring to the Polish reality he pointed out that the supervisory and regulatory policy towards banks, investment firms and insurance undertakings and the needs of the Polish economy required a strong development of the market of debt securities issued by banks, investment firms and insurance undertakings. The banking sector and the development of the debt securities market are connected with the necessity  to fulfil MREL, the requirements of the WFD, increase own funds and increase the financing of fixed-rate mortgages. In the insurance market, in turn, as noted by the speaker, the development of debt securities is connected with the entry into force of the IRRD (which in the future will introduce a requirement similar to MREL), recapitalisation and management of catastrophe risks.

During the debate ‘The financial bonds market from the perspective of issuers’, the moderator, Rafał Kozłowski, Senior Expert at McKinsey&Company, invited Mirosław Kachniewski, President of the Management Board of the Polish Association of Listed Companies, Marek Lusztyn, Vice-President of the Management Board for risk management at mBank S.A., Piotr Mazur, Vice-President of the Management Board supervising the Area of Risk Management at PKO Bank Polski, and Dagmara Wieczorek-Bartczak, Member of the Management Board of the Bank Guarantee Fund, to take part in the discussion.

The debate was divided into four rounds during which the speakers had the opportunity to answer questions such as: why issue bonds and what the bond issuances are for, how the market looks like from the perspective of the issuer (also in terms of green bonds), the balance between benefits and risks from an issuance, and what can be done in the future for the market  to be safe. 

During the discussion it was stated that financial institutions issued bonds because they were somewhat forced by the regulations; bonds were issued both for the domestic and the foreign market, but they were not offered with retail clients in mind. ‘As a rule, the balance of benefits and risks is not clear, it is not economically rational ’, Piotr Mazur observed. Bond issuances  are more helpful for diversification of risks and development of the economy. ‘We need a developed, cheap, effective, transparent primary market of bonds  for retail investors’, Mirosław Kachniewski said. As regards bonds issued by banks, Dagmara Wieczorek-Bartczak warned against issuing such risky instruments for retail investors. 

The second debate, ‘The financial bonds market from the perspective of investors’, was moderated by Andrzej Dżuryk, Member of the Management Board of Societe Generale S.A. Oddział w Polsce. The panelists included: Mariusz Bieńkowski, President of the Management Board of BondSpot, Sebastian Buczek, President of the Management Board of QUERCUS TFI S.A., Rafał Matulewicz, Vice-President of the Management Board of PKO TFI, Jakub Papierski, Senior Advisor at EY-Parthenon, Strategy and Transactions, and Małgorzata Rusewicz, President of the Management Board of the Chamber of Fund and Asset Management (PL: Izba Zarządzających Funduszami i Aktywami).

In the European financial system, most of the financing comes from the banking sector, whereas the European Union strives to increase market financing, which will also take place in Poland. Taking into account Poland’s financial needs, both related to energy transition, development of the defence system, future reconstruction of Ukraine, and continuation of reducing development disparities  between Poland and the most developed economies, this requires looking for new solutions. In view of these challenges the current models of financing, based on cheap deposits, may not be sufficient. Currently, there is a debate in the UE around the European Secured Notes, instruments based on covered bonds but using other types of assets as well, such as loans for SMEs  and infrastructure loans, which may find its application in the Polish capital market. 

According to Małgorzata Rusewicz, in Poland, similarly to the other UE countries, the recipient of financial bonds should be pension funds and investment funds. The engagement in the bond market, e.g. from the employee capital plans (PPK), will result from regulatory requirements. 

From the infrastructure side, the Polish market is well prepared for instruments such as financial bonds, as Mariusz Bieńkowski assured, indicating that there are appropriate plans ready to meet the challenges of this market.

Green bonds may be a problem in Poland, which results from a large share of coal companies in the market. In other respects we are ready for the proposals of different bonds, e.g. infrastructure bonds. 

Rafał Matulewicz noted that the available set of instruments was complete in terms ofinvestors’ needs and the need to ensure the financing for the challenges lying before Poland.

Summing up the debate, Andrzej Dżuryk stated that in structural terms the main demand would be from the side of bonds of regulatory nature, but in terms of infrastructure we were prepared, counting also on the regulator’s initiative. 

The participants of the seminar called on Komisja Nadzoru Finansowego to give an impulse which the market needs but is not able to provide by itself. Chair Jastrzębski commented on it by expressing the readiness of the KNF to respond to such needs.