PKO Bank Polski is aiming to set up a mortgage bank by next year in order to be able to issue covered bonds as a source of long term funding better matched to the maturity of the assets, it said yesterday (Wednesday).

The bank said that the plans are in response to new capital requirement regulations (CRD IV) and expectations of the Financial Supervisory Authority in Poland, and reflect the bank’s aim of increasing the share of long term funding sources.

It said that the mortgage bank would issue in Polish złoty as well as foreign currencies.

Universal banks are not allowed to issue covered bonds in Poland. A PKO BP mortgage bank would be the third covered bond issuer in Poland, in addition to BRE Bank Hipoteczny and Pekao Bank Hipoteczny.

PKO BP is the largest commercial bank in Poland.