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2018 Financial and Social Report

[GRI G4 FS15]

Sales personnel in Bank Millennium follow the guidelines laid down by the Book of Client Service Standards. The guidelines obligate employees to do the following in particular: analyze client needs, clearly present the Bank’s offer, discuss the rules on how the product operates, present cost-related information, diagnose client doubts, provide explanatory information and finally – confirm that the rules on the product’s operation are intelligible to the client prior to signing an agreement.

At the Bank Millennium Group, ethical sale of products is regulated not only in such guidelines as the Code of Ethics, Book of Standards or legal regulations. Attaching great importance to the quality and a high level of ethical sales, the Bank also drafted Client Call Scripts about daily banking products, credit products and saving and investment solutions. These scripts have been in operation for several years and are gradually being updated and optimized. Each implementation of a new script involves mass implementation of the solution among direct customer service employees and training.   All modifications to call scripts focus on providing clients with thoroughly transparent information and education to ensure that they are fully aware of the Bank services they utilize.

Adherence to the Client Call Scripts and Client Service Standards is constantly monitored by a unit specially set up for this purpose.

Results of the monitoring activity are delivered to the Bank’s Management Board and the direct superiors of the assessed employees, and are also used to take remedial actions at the level of the Bank as a whole. The monitoring of compliance with sales standards and ethics is also conducted independently of the Bank by various types of service quality rankings. The Bank treats them as very important and takes into account any conclusions that can be drawn from them.

Ethical sales regulations are also in force in the companies. Millennium Dom Maklerski has implemented a number of documents governing the rules for showing due diligence in client contacts. The most important ones are the rules and regulations for providing brokerage services, contracts executed with clients and the “Policy of executing orders and acting in accordance with the best interest of the Client at Millennium Dom Maklerski SA”.

Before offering a product, the Bank checks client needs to ascertain his/her knowledge about credit products and financial standing, whereby it is possible to tweak the manner of communication and align the product to his/her circumstances. The risk of over-indebtedness and household budget mismanagement is minimized owing to advanced methods of assessing clients’ creditworthiness and capabilities used by the Bank. These methods make it possible to identify situations in which a client should not take out any more debt.   The Bank offers its clients the opportunity to consolidate unsecured debt being repaid to other lenders, which often allows them to reduce their monthly credit charges in their household budgets and improve their financial security. Clients using online transaction banking may take advantage of advanced tools for mananging expenses enabling them to deepen their knowledge on how to manage their budget effectively. [GRI 102-11, 102-30]

Bank Millennium offers a consolidation loan to clients who have difficulty servicing their debt with the option to amortize their debt in other banks. In addition, clients may take advantage of a deferred payment of one installment of a cash or consolidation loan, which is very helpful for those who must use the funds for an installment payment in a given month for other purposes.

If a loan is not repaid, the Bank first seeks to reach an amicable settlement, offering clients an opportunity to enter into restructuring agreements.

Debt restructuring applied by the Bank in the process of pursuing receivables involves the execution of an annex to the original agreement or a separate restructuring agreement whose content modifies the debt repayment terms binding for the client, as appropriate to the client’s standing and financial capabilities. Such modifications may include: reduction of the monthly repayment amount (temporary or for the entire repayment term), suspension of the payment of an installment in whole or in part, extension of the loan term, reduction of the interest rate, change of the installment payment date, change in the settlement sequence of the amounts to be repaid, change of the collateral or change of the installment amount. In 2018, approximately 2.7% of the clients in the process of recovery of retail receivables benefited from these solutions.

The share of FX mortgage loans in the total portfolio of the Bank dropped to 26.6% at the end of 2018. In 2018, activities supporting clients in loan FX repayment were continued. The Bank carried out a number of communication activities regarding the available solutions, including loan repayment options via the Millenet application or the possibility to set individual conditions for full repayment of the loan. The clients may at any given moment take advantage of a special offer to make partial or total early repayment or convert their mortgage loan from a foreign currency into Polish zloty. It was also possible to reduce the Bank’s margin, one of the elements of the interest rate, under these solutions. In the event of a partial early repayment it was possible to obtain a margin discount provided that the paydown was not lower than 10% of the outstanding balance of debt. In the event of a total early repayment it was possible to agree on individual terms and conditions for the repayment. Insofar as the parties did not agree otherwise, the instructions were executed at the exchange rate equal to the National Bank of Poland’s (NBP) current average exchange rate published on the date of executing the instructions. The Bank’s special offer has been in force without interruption (with some minor modifications) since 2015.

In 2018, Bank Millennium continued to follow the solutions introduced under what is known as the “six-pack”, namely:

  1. Accepting a negative LIBOR rate for calculating the interest rate for mortgage loans.
  2. A significant reduction in the FX spread leading to a perceptible decrease in the loan installments paid by clients.
  3. At a client’s request, extension of the repayment term or temporary suspension of loan installment repayment so that the installment amount is not higher or just slightly higher than before freeing the exchange rate. These requests may be made only by borrowers residing in the property for which the loan was taken.
  4. Desisting from the demand for borrowers to furnish new collateral and loan insurance if they pay their loan installments on a timely basis.
  5. Providing the borrowers with the opportunity to replace the loan currency from CHF to PLN at the exchange rate equal to the average exchange rate published by the NBP.
  6. Making the rules for mortgage loan restructuring more flexible for clients residing in properties subject to loans.

Two class action suits related to the indexation of loans denominated in Swiss francs and insurance for the low down payment are pending against Bank Millennium. These cases are undergoing examination and no judgment related thereto has been pronounced. [GRI 206-1]