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2018 Financial and Social Report

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. note 15) “Corporate Income Tax”.

Value of the court litigations, as at 31.12.2018, in which the companies of the Group were a plaintiff, totalled PLN 239.9 million.

On January 3 2018, Bank Millennium received decision of the President of the Office of Competition and Consumer Protection (UOKIK), in which the President of UOKIK found infringement by the Bank of the rights of consumers. In the opinion of the President of UOKiK the essence of the violation is that the Bank informed consumers (it regards 78 agreements) in responses to their complaints, that the court verdict stating the abusiveness of the provisions of the loan agreement regarding exchange rates does not apply to them. According to the position of the President of UOKiK the abusiveness of contract’s clauses determined by the court in the course of abstract control is constitutive and effective for every contract from the beginning. As a result of the decision, the Bank was obliged to:

1)  send information on the UOKiK’s decision to the said 78 clients,

2)  place the information on decision and the decision itself on the website and on Twitter,

3) to pay a fine amounting to 20.7 mln PLN. The decision on the fine is not immediately enforceable.

The decision of the President of UOKIK is not final. The Bank does not agree with this decision and lodged an appeal within the statutory time limit.

As at 31.12.2018, the most important proceeding, in the group of the court cases where the Group’s companies were defendant, was a case brought up by Europejska Fundacja Współpracy Polsko-Belgijskiej/European Foundation for Polish-Belgian Cooperation (EFWP-B) against Bank Millennium S.A., worth of the dispute 521.9 million PLN with statutory interest from 05.04.2016 until the day of payment.

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 plaintiff, the basis for the claim 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 concluded between the Bank and PCZ S.A., 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 250.0 million PLN. The petition was dismissed on 5.09.2016 with legal validity by the Appellate Court. The Bank is requesting complete dismissal of the suit, stating disagreement with the charges raised in the claim. Supporting the position of the Bank, the Bank’s attorney submitted a binding copy of final verdict of Appeal Court in Wrocław favourable to the Bank, issued in the same legal state in the action brought by PCZ SA against the Bank.

At present, the court is conducting evidence proceedings.

Additionaly, on 19 January 2018 the Bank has received the lawsuit petition of First Data Polska SA requesting the payment of 186.8 mln PLN. First Data claims a share in an amount which the Bank has received in connection with the Visa Europe takeover transaction by Visa Inc. The plaintiff based its request on an agreement with the Bank on co-operation in scope of acceptance and settlement of operations conducted with the usage of Visa cards. The Bank does not accept the claim and filed the response to the lawsuit petition within the deadline set forth in the law. The case is being examined by the Court of first instance.

As at 31.12.2018, the total value of the subjects of the other litigations in which the Group’s companies appeared as defendant, stood at PLN 416.0 million (excluding the class actions described below). In this group the most important category are cases related to forward transactions (option cases) and cases related with FX loans mortgage portfolio.

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.

The class action related to the indexation issue.

On 21 October 2014 a class 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 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.

Actual status:

The number of the group members amounts to approximately 5 400 and the value of the litigation has been estimated to approximately PLN 146 million. The number of loan agreements involved is approximately 3 400.

The current stage of the proceedings is establishing the composition of the group (i.e. determining whether all persons who joined the group may participate in the group).

The class action related to the LTV insurance

On the 3rd of December 2015 a class action was served on the Bank. A group of the Bank’s debtors (454 borrowers party to 275 loan agreements) is represented by the Municipal Consumer Ombudsman in Olsztyn. The plaintiffs demanded payment of the amount of PLN 3.5 million, claiming that the clauses of the agreements, pertaining to the low down payment insurance, are unfair and thus not binding. Plaintiff extended the group in the court letter filed on the 4th of April 2018, therefore the claims increased from PLN 3.5 million to over PLN 5 million.

Current status:

On the 1st of October 2018, the group’s representative corrected the total amount of claims pursued in the proceedings and submitted a revised list of all group members, covering the total of 697 borrowers – 432 loan agreements. The value of the subject of the dispute, as updated by the claimant, is PLN 7 371 107.94.

On the 21st of November 2018 the Bank filed objections regarding the membership of individual persons in the group. The court also ordered the Bank to submit its objections as to the revised list of all group members by 28 January 2019.

The next stage of the proceedings is establishing the composition of the group (i.e. determining whether all persons who joined the proceedings may participate in the group).

Amount ‘000 PLN 31.12.2018 31.12.2017
Off-balance conditional commitments granted and received 10 229 552 9 353 288
Commitments granted: 9 855 664 9 121 526
– financial 8 423 814 7 899 290
– guarantee 1 431 850 1 222 236
Commitments received: 373 887 231 762
– financial 0 0
– guarantee 373 887 231 762


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 31.12.2018 31.12.2017
financial sector 59.2 44.6
non-financial sector (companies) 1 364.4 1 170.8
public sector 8.3 6.8
Total 1 431.9 1 222.2
Commitments granted – guarantee in PLN million 31.12.2018 31.12.2017
Active guarantees and sureties 904.3 725.6
Sureties for loans granted through EFRWP* 0.1 0.3
Lines for guarantees and sureties 535.1 501.0
Total 1 439.5 1 226.9
Provisions created (7.6) (4.7)
Commitments granted – guarantee after provisions 1 431.9 1 222.2

(*) European Development Fund of the Polish countryside


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

By currency 31.12.2018 31.12.2017
PLN 730 903 581 017
Other currencies 173 389 144 579
Total: 904 292 725 596


By type of commitment 31.12.2018 31.12.2017
Number Amount Number Amount
Guarantee 3 239 873 388 3 092 708 473
Surety 0 0 0 0
Re-guarantee 21 30 904 20 17 123
Total: 3 260 904 292 3 112 725 596


By object of the commitment 31.12.2018 31.12.2017
Number Amount % share Number Amount % share
good performance of contract 2 378 436 841 48,31% 2 270 403 119 55,56%
punctual payment for goods or services 275 279 321 30,89% 247 135 855 18,72%
bid bond 256 21 021 2,32% 251 27 565 3,80%
rent payment 255 55 001 6,08% 257 49 906 6,88%
advance return 42 37 052 4,10% 31 32 025 4,41%
customs 28 61 391 6,79% 25 59 720 8,23%
other 14 2 381 0,26% 18 1 741 0,24%
payment of bank loan 12 11 284 1,25% 13 15 665 2,16%
Total: 3 260 904 292 100,00% 3 112 725 596 100,00%