Current reports

22nd June 2007 | 20/2007

Current Report No. 20/2007 on resolutions adopted at the Ordinary General Meeting of Shareholders of Bank Handlowy w Warszawie S.A. held on 21 June 2007

Legal basis: § 39 section 1 item 5) of the Ordinance of the Minister of Finance on current and periodical information provided by issuers of securities dated 19 October 2005

The Management Board of Bank Handlowy w Warszawie S.A. presents the resolutions adopted at the Ordinary General Meeting of Shareholders of Bank Handlowy w Warszawie S.A. held on 21 June 2007.

RESOLUTION No. 1
of the Ordinary General Meeting of Shareholders
of Bank Handlowy w Warszawie Spółka Akcyjna

regarding: election of the Chairperson of the Ordinary General Meeting

The Ordinary General Meeting of Shareholders resolves to appoint Krzysztof Stefanowicz as Chairperson of the Ordinary General Meeting.

RESOLUTION No. 2
of the Ordinary General Meeting of Shareholders
of Bank Handlowy w Warszawie Spółka Akcyjna

regarding: adoption of the Agenda of the Ordinary General Meeting of Shareholders

The Ordinary General Shareholders Meeting resolves to adopt the Agenda of the Ordinary General Meeting announced in “Monitor Sądowy i Gospodarczy” No. 95 (2692), item 5983 of May 17, 2007 in the following wording:

Opening of the General Meeting;
Election of the Chairperson of the General Meeting;
Concluding correctness of convening the General Meeting and its ability to adopt binding resolutions;
Adoption of the Agenda;
Election of the Voting Committee;
Adoption of resolutions on:
1) consideration and approval of the Management Board’s Report on the Activities of Bank Handlowy w Warszawie S.A. in 2006 and the financial statements of Bank Handlowy w Warszawie S.A. for 2006;
2) consideration and approval of the Report of the Supervisory Board of Bank Handlowy w Warszawie S.A. on its activities in the period from the Ordinary General Meeting held in 2006 to the Ordinary General Meeting held in 2007 as well as the results of the assessment of the activities and financial statements of the Bank and the Bank’s Capital Group in 2006 and the Management Board’s motion on the distribution of the net profit for 2006;
3) acknowledgement of the fulfillment of duties in the year 2006 by the Management Board Members;
4) acknowledgement of the fulfillment of duties in the year 2006 by the Supervisory Board Members;
5) distribution of the net profit for 2006 and dividend payment and determination of the dividend date and the dividend payment date;
6) consideration and approval of the Report on Activities of the Capital Group of Bank Handlowy w Warszawie S.A. in 2006 and the consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for 2006;
7) amendments to the Bank’s Articles of Association;
8) compliance by Bank Handlowy w Warszawie S.A. with corporate governance standards;
9) changes in the composition of the Bank’s Supervisory Board.
Closure of the General Meeting.

RESOLUTION No. 3
of the Ordinary General Meeting of Shareholders
of Bank Handlowy w Warszawie Spółka Akcyjna

regarding: election of the Voting Committee

The Ordinary General Meeting of Shareholders resolves to appoint Łukasz Czujko as member of the Voting Committee.

RESOLUTION No. 4
of the Ordinary General Meeting of Shareholders
of Bank Handlowy w Warszawie Spółka Akcyjna

regarding: election of the Voting Committee

The Ordinary General Meeting of Shareholders resolves to appoint Ewa Janiak as member of the Voting Committee.

RESOLUTION No. 5
of the Ordinary General Meeting of Shareholders
of Bank Handlowy w Warszawie Spółka Akcyjna

regarding: election of the Voting Committee

The Ordinary General Meeting of Shareholders resolves to appoint Izabela Madzińska as member of the Voting Committee.

RESOLUTION No. 6
of the Ordinary General Meeting of Shareholders
of Bank Handlowy w Warszawie Spółka Akcyjna

regarding: consideration and approval of the Report of the Management Board on the activity of Bank Handlowy w Warszawie S.A. in 2006 and financial statements of Bank Handlowy w Warszawie S.A. for 2006

Pursuant to Art. 395 § 2 item 1) of the Commercial Companies Code and § 9, section 1, item 1 of the Bank’s Articles of Association, the Ordinary General Meeting of Shareholders of Bank Handlowy w Warszawie S.A. - after considering the Report of the Management Board on the activity of Bank Handlowy w Warszawie S.A. in 2006 and the financial statements of Bank Handlowy w Warszawie S.A. for the year ended December 31, 2006 - resolves to:

approve the Report of the Management Board on the activity of the Bank Handlowy w Warszawie S.A. in 2006,
approve the financial statements of Bank Handlowy w Warszawie S.A. for the year ended December 31, 2006, consisting of:
1. Balance sheet prepared for the day of December 31, 2006 indicating the total assets and liabilities in amount of PLN 35,095,894,313.89;
2. Profit and loss account for the year 2006 indicating a net profit in amount of PLN 620,391,649.83;
3. Specification of changes in own equity for the year 2006 indicating the overall own equity in amount of PLN 5,304,564,638.38;
4. Cash flow report for the year 2006 indicating an increase in net cash funds in the amount of PLN 299,358,814.94;
5. Notes to the statements for the year 2006 together with the opinion and the report of the external auditor.

RESOLUTION No. 7
of the Ordinary General Meeting of Shareholders
of Bank Handlowy w Warszawie Spółka Akcyjna

regarding: consideration and approval of the Report of the Supervisory Board of Bank Handlowy w Warszawie S.A. on the Supervisory Board’s activity in the period from the date of the Ordinary General Meeting of Shareholders in 2006 to the date of the Ordinary General Meeting of Shareholders in 2007 including the results of the evaluation of the Report of the Management Board on the activity of Bank Handlowy w Warszawie S.A. in 2006 and the financial statements of Bank Handlowy w Warszawie S.A. for 2006.

After considering the Report of the Supervisory Board of Bank Handlowy w Warszawie S.A. on its activity in the period from the date of the Ordinary General Meeting of Shareholders in 2006 to the date of the Ordinary General Meeting of Shareholders in 2007, including the results of the evaluation of the Report of the Management Board on the activity of Bank Handlowy w Warszawie S.A. in 2006 and the financial statements of Bank Handlowy w Warszawie S.A. for 2006, the Ordinary General Meeting of Shareholders resolves to approve the aforementioned report.

Attachment to the Resolution
REPORT
on the activity of the Supervisory Board of Bank Handlowy w Warszawie S.A.

in the period from the Ordinary General Meeting held in 2006
to the Ordinary General meeting held in 2007

I. CHANGES IN THE COMPOSITION OF THE SUPERVISORY BOARD AND THE MANAGEMENT BOARD

The Ordinary General Meeting during its session held on June 22, 2006 appointed Messieurs Stanisław Sołtysiński, Shirish Apte, Andrzej Olechowski, Goran Collert, Todd Gravino and Mirosław Gryszka for a subsequent three-year term of office. On September 13, 2006 the mandate of Mr. Todd Gravino expired as a result of his resignation. Next, on September 29, 2006 the Extraordinary General Meeting of the Bank appointed Mr. Sanjeeb Chaudhuri as Member of the Supervisory Board of the Bank. On October 2, 2006 the mandate of Mr. Jarosław Myjak expired as a result of his resignation. During the session of the Extraordinary General Meeting of the Bank held on December 5, 2006, Mr. Wiesław Smulski was elected as Member of the Supervisory Board; and subsequently during the session held on March 20, 2007 the Extraordinary General Meeting of the Bank recalled Mr. Rupert Hubbard from the function of Supervisory Board Member, and elected Ms. Sabine Hansen as Member of the Supervisory Board.

Due to the above changes, during the reporting period the Supervisory Board operated in the following composition:

Mr. Stanisław Sołtysiński	Chairperson of the Supervisory Board	entire reporting period
Ms Shirish Apte	Vice Chairperson of the Supervisory Board	entire reporting period
Mr. Andrzej Olechowski	Vice Chairperson of the Supervisory Board	entire reporting period
Mr. Goran Collert	Supervisory Board Member	entire reporting period
Ms Susan Dean	Supervisory Board Member	entire reporting period
Mr. Todd Gravino	Supervisory Board Member	until 13 September 2006
Mr. Mirosław Gryszka	Supervisory Board Member	entire reporting period
Ms Sabine Hansen	Supervisory Board Member	since 20 March 2007
Mr. Rupert Hubbard	Supervisory Board Member	until 20 March 2007
Mr. Stephen H. Long	Supervisory Board Member	entire reporting period
Mr. Jarosław Myjak	Supervisory Board Member	until 02 October 2006
Mr. Krzysztof Opolski	Supervisory Board Member	entire reporting period
Ms Aneta Popławska	Supervisory Board Member	entire reporting period
Mr. Wiesław Smulski	Supervisory Board Member	since 05 December 2006

During the reporting period the Committees of the Supervisory Board operated in the following composition:

Audit Committee

Mr. Mirosław Gryszka	Chairperson of the Committee	entire reporting period
Mr. Shirish Apte	Committee Member	entire reporting period
Ms Susan Dean	Committee Member	entire reporting period
Mr. Krzysztof Opolski	Committee Member	entire reporting period
Ms Aneta Popławska	Committee Member	entire reporting period
Mr. Wiesław Smulski	Committee Member	since 05 December 2006

Remuneration Committee

Mr. Stanisław Sołtysiński	Chairperson of the Committee	entire reporting period
Mr. Shirish Apte	Committee Member	entire reporting period
Mr. Andrzej Olechowski	Committee Member	since 05 December 2006
Mr. Rupert Hubbard	Committee Member	until 20 March 2007
Mr. Stephen H. Long	Committee Member	entire reporting period
Ms Sabine Hansen	Committee Member	since 20 March 2007

Strategy and Management Committee

Mr. Shirish Apte	Chairperson of the Committee	entire reporting period
Mr. Andrzej Olechowski	Vice Chairperson of the Committee	entire reporting period
Mr. Goran Collert	Committee Member	entire reporting period
Mr. Mirosław Gryszka	Committee Member	entire reporting period
Mr. Krzysztof Opolski	Committee Member	entire reporting period
Mr. Stanisław Sołtysiński	Committee Member	entire reporting period

Acting pursuant to its statutory authority, at its second meeting held on 26 September 2006 the Supervisory Board appointed Ms. Sonia Wędrychowicz-Horbatowska as Vice President of the Management Board.

II. ASSESSMENT OF THE FINANCIAL RESULTS AND OVERALL SITUATION OF THE COMPANY

In the reporting period, according to its statutory duty, the Supervisory Board analyzed the financial results of the Bank and the overall situation of the Company and performed other supervisory functions.
During its meeting on September 26, 2006 the Supervisory Board analyzed the information provided by Management Board, on the Bank’s financial results for the first half of 2006. According to the audit performed by chartered auditor, the results demonstrated the Bank’s good financial condition.
During its meeting held on March 20, 2007 the Supervisory Board analyzed the following documents: the Bank’s financial statements as at December 31, 2006 together with the opinion and report of chartered auditor, the Management Board’s report on the company’s activities in 2006, motion regarding the distribution of the Bank’s net profit for 2006, as well as the Consolidated Financial Statements of the Bank as at December 31, 2006 together with the opinion and report of chartered auditor, and the Report on the activities of the Capital Group of Bank Handlowy w Warszawie S.A. for 2006. The Supervisory Board performed a detailed assessment of the Statements from the perspective of their compliance with books and documents, confirmed with the opinions and reports of the chartered auditor, and the opinion of the Audit Committee. The Supervisory Board evaluated also the Management Board’s motion regarding the distribution of profit for 2006 and analyzed the Bank’s financial results and economic situation, as well as the policy directions adopted by the Management Board. As a result of this evaluation, the Supervisory Board issued a positive opinion on the Bank's results and recommends to the General Meeting to adopt resolutions approving these reports and financial statements. The Supervisory Board also decided to recommend the presentation of reporting documents to the General Meeting for approval and granting acknowledgement of fulfillment of duties to the authorities of Bank Handlowy w Warszawie S.A.
During the same meeting on March 20, 2007 the Supervisory Board appointed a chartered auditor, entrusting this task to KPMG Audyt Sp. z o.o.
During its meeting on March 20, 2007 the Supervisory Board discussed in detail the Bank’s situation in 2006 in accordance with Rule 18 of the "Good Practices in Public Companies”.

Since its merger with Citibank Poland S.A., net profits of Bank Handlowy w Warszawie S.A. have been consistently growing and 2006 was a record year in this respect.
The Bank’s net profit amounted to PLN 620,392 thousand, while the consolidated net profit of the Capital Group of the Bank was PLN 657,056 thousand.
The Bank’s net profits were mainly attributable to: an increase in net interest income, an increase in net fee and commission income, an increase in dividend income, an increase in net gains from disposal of non-current assets, an increase in net other operating income as compared to the previous year, and a decrease in overheads.

Despite a fall in the market interest rates, the Bank reported an increase in net interest income. It amounted to PLN 1,004 million as compared to PLN 988 million in 2005. This was mainly due to an increased volume of loans granted by the Consumer Bank and an increase in interest income from available-for-sale debt instruments resulting from a significant growth of the portfolio. The fall in the market interest rates, combined with a boom in the market for investment instruments, also gave rise to an increased popularity of insurance and investment products. This fact had a favorable effect on the Bank, namely its net fee and commission income went up, despite the lack of any commission income from two subsidiaries of the Bank (Handlowy Zarządzanie Aktywami SA and Towarzystwo Funduszy Inwestycyjnych Banku Handlowego w Warszawie SA) which were sold at the beginning of 2006. The Bank also received significant proceeds thanks to the implementation of its strategic decisions to sell Towarzystwo Funduszy Inwestycyjnych Banku Handlowego w Warszawie SA, Handlowy Zarządzanie Aktywami SA, a stake in Handlowy-Heller SA, an associated undertaking, and the card transaction processing unit of the Consumer Bank. The increase in net other operating income was attributable to a decrease in provisions recognized for legal disputes, an increase in sales of services to Citigroup Inc., and income earned from shares allocated by MasterCard.¹

The year 2006 saw a clear decrease in the Bank’s overheads. This decrease was the effect of the restructuring activities initiated in the past and continued in the year ended 31 December 2006. The activities were intended to improve the Bank's profitability through cost optimization. Costs were falling in virtually all the areas of the Bank’s operations, with the exception of staff costs, which increased slightly compared with the prior year. The increase in staff costs was the result of an increase in salaries and incentives, and an increased headcount in the growing CitiFinancial network. Considering a significant increase in the number of offices (over the year, the number of the Bank’s offices went up by 50 and reached 99 branch offices and 12 smaller sales offices as at the end of 2006, compared with 61 offices as at the end of 2005) and an increase in marketing expenses, the decrease in overheads is all the more worth noting.

In the year ended 31 December 2006, loans remained the largest component of the Bank's assets. The total balance of the Bank's loan receivables was comparable with the balance reported in the prior year, however we draw attention to the fact that, for the first time for several years, the Bank reported an increase in loan receivables from non-banking clients (PLN 66 MM, i.e. around 1%). The increase was mainly attributable to increased lending to retail customers which offset decreased lending to top tier corporate customers whose financing needs decreased due to improved financial condition. The Management Board expects that the intended launch of new credit products, in the first instance home equity and mortgage loan, combined with a boom in the market and borrower optimism, will give rise to an even greater growth of the retail customer loan portfolio over the next couple of years. The Bank regularly reviews the concentration of its exposure portfolio to avoid dependence on a small number of customers.

The Bank reported a net decrease in impairment losses. The fact that the Bank released its provision for a subordinated loan granted to a subsidiary (due to its repayment) also had a significant favorable effect on the Bank’s net profit for the year.

The debt securities portfolio remains the second largest component of the Bank’s assets. The fact that its balance is very high (mainly the Treasury bonds portfolio) is intended to bring benefits from a boom in the market for debt securities and is driven by the need to invest cash held by the Bank.

In 2006, slight changes in the composition of the Bank’s equity and liabilities occurred. The Bank’s total liabilities went up, mainly due to an increase in deposits placed by corporate customers and an increase in amounts due to the banking sector. The balances of deposits of non-banking financial institutions and retail (private) customers decreased. As far as the private customers are concerned, this was the result of a reallocation of some of their funds to more profitable investment products.

The Bank’s equity as at the end of 2006 was higher than as at the end of 2005 due to the fact that the Company retained a part of its earnings for 2005. The Supervisory Board believes that the Bank’s equity is absolutely sufficient to maintain the institution's financial safety, deposits placed with the Bank, and fully ensures its growth potential. As at the end of 2006, the Bank’s capital adequacy ratio was comparable with that as at the end of the prior year and was fully compliant with the Polish Banking Law. Moreover, the portfolio of exposures to non-banking entities did not include any exposure exceeding the concentration limits specified in the relevant regulations.

The Supervisory Board favorably assesses the Bank’s efforts to enhance the competitiveness of its product range and winning new clients. An extensive product range and individual service, in the first instance the new lending scheme and the Internet platform for FX transactions, are popular with the Bank’s corporate customers. This contributed to an increase in the number of new SME customers by nearly a thousand. Several new safety-enhancing solutions were offered in respect of cash products, e.g. training for client staff in detecting counterfeit banknotes, combining bank escort services and cash deposits at Polish Post offices, delivery of the so called safe envelopes to an address indicated by the client. Payment card products intended for institutional customers are also very popular. The Bank strengthened its position in the business cards market, which manifests itself in a significant increase in the number of cards issued. Moreover, the Bank introduced a product that is new for the public sector, i.e. the so-called prepaid cards, which are used, among others, for managing the distribution of social benefits by social welfare centers. A new EU consulting services product is intended mainly for the SME segment. The product may be made used of by clients at any stage in the EU grant application process.
Out of concern for the retail customer and further, gradual growth of the Consumer Bank, a number of innovative solutions were introduced, e.g. a credit card for students which is issued on very attractive terms, an additional card for young people, issued to the existing card holders, which is an alternative to pocket money, while at the same time serving educational purposes for future clients. Moreover, the Bank’s distribution network was expanded to incorporate some unconventional channels, e.g. sales points at BP gas stations and commercial centers.

Since January 2003 Moody’s has consistently assigned an A2 rating to the Bank’s long-term deposits denominated in a foreign currency (the sixth best rating on a 21-point scale; the investment grade range) and a Prime-1 rating to short-term deposits (the best rating on a 4-point scale). These are the highest ratings possible for a company with a registered office in Poland, which demonstrates the Bank’s stable position. Moreover, on 26 February 2007, Moody's notified the Bank of raising its financial strength rating from D+ to C- which was not only the effect of a new approach adopted by Moody’s but also a favorable assessment of the changes taking place at the Bank. In addition to that, on 3 March 2007, Moody’s notified the Bank of assigning an Aa2 rating (the third best rating) to its long-term deposits in the local currency and a Prime-1 rating to its short-term deposits in the local currency.

The Supervisory Board regularly reviews the Bank’s relationship with Citigroup Inc., the majority shareholder. The relationship has several dimensions, in the first instance implementation of new banking products and information systems, risk management, financial control, human resource management and internal control. The support from the largest financial institution in the world is an important asset of the Bank, contributing to the consolidation of its competitive position in the local market. The Supervisory Board favorable assesses the Management Board's efforts to adequately account for the services provided by Citigroup Inc.

The Bank pursues a strategy of building a universal financial institution, offering a comprehensive range of products and solutions to meet the needs of a wide range of customers. As a result of the implementation of a strategic decision to focus on the core business activities, at the beginning of 2006 the Bank sold Towarzystwo Funduszy Inwestycyjnych Banku Handlowego w Warszawie SA, Handlowy Zarządzanie Aktywami SA, Handlowy - Heller SA, and the card transactions processing unit. Factoring services are provided using an internal product platform, whereas an open architecture approach is followed in respect of investment products and asset management services offered by the Bank. This means that the Bank offers its customers products and services of investment funds companies offering the highest quality in terms of returns, transparency and management as well as the compliance with the highest standards of products offered by the Bank. As far as asset management is concerned the Bank provides a wide range of services by distributing products of investment funds companies operating in Poland's market and foreign funds, which makes it possible to tailor the services to requirements of particular clients. Constant access to an independent investment product offer, gradually incorporating new solutions, will be the source of the Bank’s competitive advantage in the future.

Considering the Bank’s results of operations, increased sales revenue in the key business segments, the product range and innovativeness in this respect, the Supervisory Board favorably assesses the Bank’s operation in the year 2006 and expresses its belief that the existing and intended future activities will contribute to a consolidation of the market position of Bank Handlowy w Warszawie S.A.

III. OUTLINE OF THE CONSUMER BANKING STRATEGY

During its third meeting held on December 5, 2006, the Supervisory Board analyzed a draft strategy of the Consumer Banking Sector.

The strategic goal of the Consumer Banking Sector is to be the best retail bank in Poland within a number of selected customer segments. The strategy comprises the following components:
Full customer relationship to be established by extending the current product offering,
Enhanced distribution strategy exploiting both the direct as well as indirect distribution channels,
Innovative acquisition strategy assuming full-fledged cooperation with the Corporate Bank, and
Efficient processes and procedures

Creation of a complete product offering assumes launch of a savings account, mortgage loans, margin lending and secured overdraft as well as equities brokerage

New customers will be able to open their current account via the Internet, while all customers will receive a new multifunctional debit card allowing them to perform non-cash transactions via the Internet. The offering will be additionally extended with a mortgage account.

The credit card strategy encompasses even more innovation – one of the proposed action steps being expansion of the target market to include CitiFinancial customers as well as students and youth above 13 years of age. Another strategy element is launch of new co-branded cards

As for investment and insurance products, our customers will be able to choose from a range of top on-shore and off-shore mutual funds as the Bank’s portfolio will be systematically extended by new funds.

The enhanced distribution strategy rests on the assumption that the Bank branches have to become more accessible. The branches that have to date serviced either individual or corporate customers are to be available for all customers. Strategic aims are to be achieved by means of innovative distribution channels such as BP petrol stations, shopping malls and opening of mini-branches on the premises of those companies, which are customers of the corporate bank. Their staff will be presented with a comprehensive product offering in the form of packages meant to replace the random sale

Within the frameworks of the ‘Client first’ initiative and based on feedback received from both external and internal customers, a number of projects have been developed and will be implemented in an aim to increase efficiency of processes, simplify documentation requirements as well as introduce new innovative ways of servicing our customers. Reaching out to customers for their feedback will be a continuous process.

The Supervisory Board approved the plans to extend the product offering and the plans to merge the service network of Consumer Banking Sector with the network of Corporate and Investment Banking Sector. The Supervisory Board discussed the issue of offering mortgage loans, as well as the development directions for product distribution channels, taking into account their innovative character.

IV. CORPORATE GOVERNANCE

During the reporting year, the Supervisory Board, within the scope of its competencies, applied the rules of Corporate Governance in Public Companies.
Due to the fact that June 30, 2007 is the deadline for filing a subsequent Bank’s statement on the adherence to good practice rules in public companies, during its meeting on May 23, 2007 the Supervisory Board approved the contents of the Bank’s statement on adherence to the rules of corporate governance in public companies.

V. SETTLEMENTS BETWEEN THE BANK AND CITIGROUP

During the reporting year, the Supervisory Board monitored and supervised issues tied to settlements between the Bank and Citigroup.

During its third meeting, on December 5, 2006 the Supervisory Board approved the changes to the Agreement on Providing CitiDirect Services, concluded with Citibank NY. The Supervisory Board also approved the conclusion of an annex to the SLA (ECHO), which defines the amount of remuneration for services received by the Bank in 2005.

During the same meeting, the Supervisory Board approved the motion to approve the SLA with Citibank NA regarding IT systems.

The Supervisory Board approved also execution of relevant annexes, tied to extension of functionalities of the CitiDirect and Flexcube systems.

VI. AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND REGULATIONS

During its second meeting, on September 26, 2006 the Supervisory Board adopted the uniform text of the Bank’s Articles of Association. During its subsequent meeting, on December 5, 2006 the Supervisory Board adopted the motion on approving changes to the regulations, “Rules and manner for procedure when opening accounts and credits for members of the Bank’s Management Board, persons holding managerial positions at the Bank and entities tied to them by capital and organization”. During the same meeting, the Supervisory Board issued its positive opinion on the proposal for changes to the Bank’s Articles of Association, on adding brokerage activities to the scope of the Bank’s business. On March 20, 2007 the Supervisory Board adopted the draft amendments to the Bank's Articles of Association, which covered the introduction of co-opt rule for the election of Supervisory Board members, changes which facilitate the sale of real estate acquired in connection with satisfying Bank’s claims resulting from banking activities, and changes resulting from the amended Banking Law provisions.

VII. MISCELLANEOUS ISSUES

On September 26, 2006 the Supervisory Board analyzed the draft model for rendering outsourcing services by the Bank for domestic and foreign companies.
During its subsequent meeting, held on December 5, 2006 (third meeting), the Supervisory Board approved the assumptions for the Monthly Information System on Current Bank Activities, designated for the needs of the Supervisory Board. According to the decisions, the report shall be presented on a monthly basis. During the same meeting the Supervisory Board completed the membership of the Audit and Remuneration Committees.

With its resolution dated March 5, 2007 the Supervisory Board appointed a Committee to investigate the complaint filed by the Bank’s employee – Director of the Legal Department.
During its fourth meeting, on March 20, 2007 the Supervisory Board adopted resolution on approval for the sale of shares in MASTERCARD Inc., held by the Bank. During the same meeting, the Supervisory Board appointed the chartered auditor (KPMG) and approved the motion of the Bank’s Management Board to convene the Ordinary General Meeting of the Bank. Also, during the same fourth meeting, the Supervisory Board approved the plan for the Bank to enter into outsourcing contracts on IT systems, required to meet the reporting requirements associated with the New Capital Accord.

This report has been considered and approved by way of resolution during the meeting of the Supervisory Board on May 23, 2007, fur the purpose of presentation to the Ordinary General Meeting of the Bank.

RESOLUTION No. 8
of the Ordinary General Meeting of Shareholders
of Bank Handlowy w Warszawie Spółka Akcyjna