Bank’s image

Reputational risk is understood as the current or anticipated risk to revenue and capital resulting from a negative perception of a financial institution’s image by customers, counterparties, shareholders/investors or regulatory authorities. Protection of reputation is crucial for the Bank due to the potential impact of this risk on the Bank’s financial results and capital, but also due to the role of the Bank as a public trust institution.

In accordance with the guidelines of the Risk management strategy and the Principles of internal capital assessment, the Bank implemented a separate regulation addressing this type of risk (Principles of Reputation Risk Management at Bank Polska Kasa Opieki Spółka Akcyjna), which was updated in December 2022, due to the need to adapt to changing standards and guidelines from regulators, as well as to account for new material risks affecting reputation, such as ESG issues. Reputation risk is another qualitative type of risk considered significant. This is due to the widespread recognition of reputation as a fundamental asset of any financial institution.

Reputation is an assessment of the Bank’s image, i.e. the perception of the Bank at any given time by the environment, which is the stakeholders. The image is not only a marketing, but also a business issue. The acceptance of the Bank by market participants and resulting support for the sale of the Bank’s products and services is dependent on the image. This consequently translates into the ability to earn adequate margins and supports the potential to expand our offerings to new markets and customer groups. Reputation is widely recognized as a fundamental asset of any financial institution, on which financial performance depends.

The reputation risk is strictly connected with other types of risk connected with the Bank’s everyday activities, like credit, operational, market, liquidity, compliance risks, ESG. Actions with a potential impact on reputational risk have been defined for each of these risks. The most important of these actions include:

In terms of credit risk:	In terms of operational risk:	In terms of compliance risk:	In terms of market risk:
financing enterprises in sensitive sectors of the economy,	internal and external frauds,	applying business practices prohibited or inconsistent with the principles of good practices,	dominant positions and monopolistic practices,
financing political organizations,	non-compliance with employment and workplace safety rules,	Bank’s operation that does not comply with legal regulations,	improper risk management resulting in significant losses for the Bank.
financing activities generating a material threat to the natural environment,	incidents connected with unequal treatment, discrimination, mobbing or employee disputes,	incorrect implementation or failure to implement recommendations of control and supervision bodies,
financing authoritarian states, states that violate international regulations, states with inadequate protection of human rights or states subject to embargo,	irregularities in customer service, product construction and unfair operating practices,	conflicts of interest,
financing sports clubs (companies or associations).	incorrect settlement of transactions, supplies and incorrect operating process management,	market abuse,
	occurrence of a cyber security incident that may lead to a breach of confidentiality, integrity and availability of information and information systems, including data leakage,
	disturbances in the activity and failures of systems that influence customer service.

Given its nature, the reputation risk is classified as difficult to measure. In accordance with the Risk management strategy and the Principles of internal capital assessment, it is not subject to quantitative measurement. Ongoing management of the Bank’s reputational risk is limited to the management of original types of risk, supported by qualitative assessment, monitoring, reporting, and reduction of reputational risk by the Bank.

applying an appropriate credit policy (including those sectors of the economy which the Bank does not involve itself in),
implementing and applying best practices and ethical rules, e.g. Principles of Best Practices in Banking of the Polish Banks Association, Charter of Best Practices in the Financial Market, Best Practices of Companies Listed at the Warsaw Stock Exchange 2021, Principles of Corporate Governance for Supervised Institutions issued by the Polish Financial Supervision Authority and the Code of Conduct of the Pekao Group, which provides for a set of key values and standards of conduct for the Bank’s employees to ensure top standards of service and reputation protection,
disseminating knowledge about regulations, ethical and corporate governance rules, as well as principles for their appropriate application among the Bank’s employees, holding training on compliance risk,
managing conflicts of interest,
preventing corruption,
counteracting the use of the Bank’s operations for purposes connected with money laundering or terrorism financing,
managing frauds (including in particular internal frauds) by preventing, discovering and fighting frauds, minimizing fraud consequences and taking actions aimed at discovering perpetrators, as well as, if justified, notifying law enforcement authorities,
ensuring a relevant level of information security, in particular including personal data of customers, as well as providing access to such information solely to authorized entities,
taking actions and initiatives aimed at increasing customer satisfaction level;
managing the customer complaint handling process,
managing through objectives (defining objectives for the Bank’s employees in sales and managerial positions regarding the quality of service and customer satisfaction),
analyzing new products and services, as well as marketing campaigns in terms of the reputation risk,
managing the business continuity of critical processes carried out in the Bank, taking into account the reputational factor in assessing their criticality,
managing processes,
undertaking activities and initiatives to implement and disseminate the Bank’s ESG Strategy, as well as monitoring and analyzing regulations in the ESG area,
consulting actions that are important for the Bank’s reputation with the Management Board of the Bank and the Supervisory Board.

The management of the Bank’s reputation is a continuous process which is actively attended by all business units and employees. A special role in this process is played by statutory bodies of the Bank and organizational units directly responsible for the original types of risk, in accordance with competences arising from separate internal regulations of the Bank. Regular observation of Bank Pekao’s brand indicators and the company’s image profile, carried out on behalf of the Bank since 2020, indicates a stable position against the competition. Bank Pekao is among the top banking brands with the best spontaneous awareness; and its image profile defines it as a traditional, Polish and trust-inspiring bank. Reputation surveys are conducted at Bank Pekao on a regular basis, with the participation of an external research institute, at an interval of 2-3 years.

The latest reputation survey was conducted in Q4 2022 and presented at the April 2023 meeting of the Management Board. The study was carried out in cooperation with the research agency Maison&Partners, which has been measuring reputation continuously since 2006. The study makes it possible to determine the level of the Bank’s reputation (based on the index: reputation index), define the Bank’s strengths and areas that pose challenges, and determine the Bank’s position in relation to the most important competitors (8 competing banks). The reputation index is defined based on five key dimensions: brand trust, references, media atmosphere around the brand, CSR and perception of the brand as an employer.

Bank Pekao was rated as a high reputation brand, being among the six banks with the highest indicators. Bank Pekao enjoys relatively high consumer confidence, not standing out from its competitors in this dimension. On other dimensions as well, Bank Pekao is among the best perceived brands, nevertheless with greater aspirations for its market position as the second largest bank.

In this regard, it is important for Bank Pekao to undertake communication activities in the long term and to influence the area of customer experience, with a particular focus on: building awareness of the Bank’s CSR activities, intensifying the area of brand recommendation and strengthening the perception of the Bank as a good employer.

Bank Pekao consistently reduces the risk of reputation loss, including by:

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