Contingent liabilities and assets

Below please find the data on the court cases pending, brought up by and against entities of the Group. A separate category are the proceedings related to the activities of the Tax Control Authority described in Chapter 13. Section 12 „Income Taxes”.

Court cases brought up by the Group +

Value of the court litigations, as at 31.12.2016, in which the companies of the Group were a plaintiff, totalled PLN 247.9 million.

Court cases against the Group +

As at 31.12.2016, the most important proceedings, in the group of the court cases where the Group’s companies were defendant, were two cases bought up by  PCZ S.A. and Europejska Fundacja Współpracy Polsko – Belgijskiej/European Foundation for Polish-Belgian Cooperation (EFWP-B) against Bank Millennium S.A., worth of the dispute PLN 150.0 million with statutory interest from 29.12.2015 until the day of payment, and PLN 521.9 million with statutory interest from 05.04.2016 until the day of payment.

The lawsuit in the first case, dated 09.07.2015, was filed to the Regional Court in Wrocław and served personally to the Bank on 28.12.2015. In the second case, the plaintiff filed the suit dated 23.10.2015 to the Regional Court in Warsaw; the suit was served to the Bank on 04.04.2016. According to the plaintiffs, the basis for both claims is damage to their assets, due to the actions taken by the Bank and consisting in the wrong interpretation of the Agreement for working capital loan, which resulted in placing the loan on demand. In the case brought by EFWP-B, the plaintiff moved for securing the claim in the amount of PLN 250.0 million. The petition was dismissed on 5.09.2016 with legal validity by the Appellate Court. An exchange of pleadings is under way; the case is before the first hearing. As regards the lawsuit filed by PCZ – the case is in the final stage of hearing of evidence in the first instance.

In both cases, the Bank is requesting complete dismissal of the suit, stating disagreement with the charges raised in the claims. Favourable forecasts for the Bank, as regards dismissal of both suits, have been confirmed by a renowned law firm representing the Bank in both proceedings.

As at 31.12.2016, the total value of the subjects of the other litigations in which the Group’s companies appeared as defendant, stood at PLN 213.4 million (excluding the class actions described below). In this group the most important category are cases related to forward transactions (option cases) with total value in dispute of PLN 197.5 million.

The Group evaluates that the risk of negative financial effects in case of a lost litigation has been fully covered by the value of the provisions established for the pending litigations.

Class actions +

On 21 October 2014 a group action was delivered to the Bank in which a group of the Bank’s borrowers represented by the Municipal Consumer Ombudsman in Olsztyn seeks the ascertainment that the Bank is liable towards the same for unjust enrichment in connection with the CHF-indexed mortgage agreements. The members of the group claim that the Bank unduly collected excessive amounts from them for the repayment of loans. According to the statement of claim, the overstatement of such amounts was to result from the application of abusive contractual provisions concerning the CHF-indexation of credits. According to the statement of claim there are approx. 2,300 group members and the value of the subject matter of the dispute is defined at PLN 45.2 million. The Bank does not agree with the claims of the group members. On 31 December 2014 the Bank submitted a response to the statement of claim. On 4 March 2015 new members joined the group action and the Claimant extended the statement of claim accordingly. According to the Claimant after the extension there are approx. 3,400 group members (including the group members included in the statement of claim) and the value of the subject matter of the dispute is approx. PLN 81.5 million (including the value provided in the statement of claim). On 14 May 2015 the Regional Court in Warsaw held a hearing concerning the admissibility of the group action proceedings. On 28 May 2015 the Regional Court in Warsaw issued a decision rejecting the group action on the grounds that the case cannot be heard in group action proceedings. On 3 July 2015 the Claimant filed an appeal against this decision, and the Court of Appeal upheld the appeal by refusing rejection of the claim. On 31 March 2016 the Regional Court in Warsaw issued a decision dismissing Bank’s motion for a security deposit to secure litigation costs. On 6 April 2016 the Bank filed an appeal against this decision; on 13 July 2016 Bank’s appeal in this regard was dismissed by the Court of Appeal. On 17 February 2016 the Claimant filed a submission with the Regional Court in Warsaw, extending the claim again by a further 1,041 group members. The new value of the subject matter of the dispute was indicated as approx. PLN 109.8 million (including the values provided in the statement of claim and the submission dated 4 March 2015). The submission dated 17 February 2016 extending the claim has not yet been served on the Bank’s counsel. On 2 August 2016 the Regional Court in Warsaw issued a decision ordering the publication of an announcement in the press concerning the commencement of group action proceedings. Following the Bank’s motion to repeal this decision, the Court suspended its execution, but, on 8 August 2016, it issued another decision for the case to be heard in group action proceedings. On 31 August 2016 the Bank appealed against this decision. On 16 December 2016 the Court of Appeal in Warsaw overruled decision of the Regional Court for the case to be heard in group action proceedings and referred the request for the case to be heard in group action proceedings to the Regional Court for re-examination.

On 3 December 2015 the Bank received a class action lawsuit lodged by a group of 454 borrowers represented by the Municipal Consumer Ombudsman in Olsztyn pertaining to low down payment insurance used with CHF-indexed mortgage loans. The plaintiffs demand the payment of the amount of PLN 3.5 million claiming that the clauses of the agreements pertaining to low down payment insurance are prohibited and thus null and void. On 3 March 2016 the Bank filed the response to the lawsuit demanding its dismissal. The first court hearing took place on 13 September 2016 and the court issued the decision on the admissibility of the class action in this case. On 16 February 2017 the Court of Appeal in Warsaw dismissed the complaint of the Bank. The decision on taking over the case for consideration in class action is therefore final.

Consolidated off-balance sheet items: +

31.12.2016 31.12.2015
Off-balance sheet conditional commitments granted and received 8 202 308 7 883 958
Commitments granted: 8 097 700 7 823 370
a) financial 7 014 009 6 712 920
b) guarantee 1 083 691 1 110 450
Commitments received: 104 608 60 588
a) financial 0 3 963
b) guarantee 104 608 56 625


The granted conditional commitments presented in the table above comprise commitments to grant credit (such as: unutilised credit card limits, unutilised current account overdraft facilities, unutilised tranches of investment loans) and issued guarantees and Letters of Credit (securing performance by customers of the Group of their obligations to third parties). The value of above-presented guarantee commitments presents the maximum value of a loss, which may be incurred by the Group, should the customers default on their obligations. The Group creates provisions for impaired irrevocable conditional commitments, reported in the “provisions” item under liabilities in the balance-sheet. The provision value is determined as the difference between the estimated amount of utilised conditional exposure and the present value of expected future cash flows under this credit exposure. In this context, the Group considers that the values presented in the above table are similar to the fair value of contingent liabilities.

The breakdown by entity of all net guarantee liabilities, reported in off-balance sheet items is presented in the table below:

Customer – sector, amount in PLN million 31.12.2016 31.12.2015
financial sector 80.0 59.7
non-financial sector (companies) 996.2 1 042.4
public sector 7.5 7.4
private individuals 0.0 1.0
Total 1 083.7 1 110.5

Guarantees and sureties granted to Clients +

Commitments granted – guarantee in PLN million 31.12.2016 31.12.2015
Active guarantees and sureties 672.4 668.9
Sureties for loans granted through EFRWP* 0.7 1.2
Lines for guarantees and sureties 415.6 445.7
Total 1 088.7 1 115.8
Provisions created (5.0) (5.3)
Commitments granted – guarantee after provisions 1 083.7 1 110.5

* – European Development Fund of the Polish countryside

The structure of liabilities under guarantees and sureties divided by particular criteria are presented by the tables below (PLN’000):

By currency 31.12.2016 31.12.2015
PLN 526 012 530 144
Other currencies 146 389 138 772
Total: 672 401 668 916
By type of commitment 31.12.2016 31.12.2015
Number Amount Number Amount
Guarantee 2 829 651 521 2 869 652 800
Surety 0 0 0 0
Re-guarantee 26 20 880 28 16 116
Total: 2 855 672 401 2 897 668 916
By object of the commitment 31.12.2016 31.12.2015
Number % share Amount Number % share Amount
good performance of contract 2 125 55.67% 374 356 2 137 56.83% 380 221
rent payment 288 7.14% 47 988 287 7.20% 48 135
punctual payment for goods or services 251 22.51% 151 339 251 22.78% 152 415
bid bond 116 2.18% 14 679 126 2.44% 16 302
Other 16 3.72% 25 011 30 0.59% 3 935
advance return 25 3.32% 22 333 24 5.50% 36 768
Customs 20 2.55% 17 140 32 3.10% 20 707
payment of bank loan 14 2.91% 19 555 10 1.56% 10 433
Total: 2 855 100.00% 672 401 2 897 100.00% 668 916
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