Strategy and business development prospects

Last year, the Bank Millennium Group implemented with equal success an extremely important project: acquisition of another bank. On 5 November 2018 the Bank announced the conclusion of the transaction to acquire 99.8% of Euro Bank S.A. shares. On 31 May 2019 after obtaining the necessary approvals, the transaction was finalized. Subsequently, the Bank obtained supervisory and General Meeting approvals for conducting the merger of both banks, which effectively took place on 1 October. The final, very important element of the acquisition transaction carried out in 2019 was the migration of the systems, branches, brand and clients of Euro Bank to Bank Millennium. This extremely difficult process was successfully completed on 11 November 2019. Thus, one year after the announcement, the Euro Bank acquisition transaction was effectively completed.

After the merger the Bank Millennium Group has almost 3.8 million clients and, at the end of 2019, 830 branches, including 602 own branches and 228 franchise branches. The Euro Bank network increased the Group’s presence in many new towns, especially smaller ones, where the acquired bank operated on the basis of the franchise model. The merged Bank has almost 700 ATMs and modern mobile and electronic banking tools. Thanks to the merger the Bank climbed to 7th place on the domestic market in terms of the number of clients.

The Bank’s position in the consumer loan segment also increased strongly, this segment being another (and very important) element of the Group’s strategy. Bank Millennium’s accelerated sales of cash loans and the merger effect doubled the value of the portfolio to PLN 15.1 billion. This has moved the Group up 3 positions to fifth spot on the domestic market in the consumer loan segment.

Euro Bank’s acquisition transaction was carried out without increasing the Bank’s share capital. This means a good use of the capital and liquidity of the Bank Millennium Group and should bring about a significant increase in efficiency and return on capital through economies of scale and through the realisation of synergies.

The area of quality improvement and implementation of state-of-the-art digital and mobile solutions remains an important area of the strategy pursued by the Bank Millennium Group. In 2019 the Bank once more achieved the highest score among financial institutions in the customer satisfaction category, including the highest NPS among banks – of 52 points (according to ARC Rynek i Opinia). One example of a successful application of mobile solutions is an over 50% increase in the number of downloaded apps of goodie (100% Group subsidiary) to 1.5 million at the end of 2019.

The Bank Millennium Group’s objective for 2020 will be to successfully carry out restructuring after the merger with Euro Bank and to return to being one of the fastest growing banks on the market.

The successful migration of all branches, clients and products of Euro Bank to the logo and platform of Bank Millennium has paved the way towards realising the benefits of the merger. First of all, the expanded network of branches (830 of them at the end of 2019) and base of 3.8 million clients enables the process of increasing sales of Bank Millennium products in new places and to new clients. At the same time, the process of closing overlapping branches will begin (initial plan of 60 outlets in 2020), accompanied by reducing the level of employment in the merged Bank. This second, difficult process has already started. The natural turnover in the Bank has been filled in by internal sources which reduce the size of employment reduction. Secondly, at the beginning of 2020 the Bank began negotiations with employee representatives on the severance packages offered to redundant workers which finished with agreement on 24 of January 2020. Under group layoffs the Bank is planning to lay off 260 employees in Q1 2020. These actions will open the way for the implementation of the planned cost synergies resulting from the merger of the two banks.

Also in 2020 the Bank will continue projects using the possibilities after the implementation of the new PSD2 payment system directive. Maintaining a leading position in the area of the quality of services and their digitalisation invariably remains an objective of the Bank Millennium Group and will continue to be supported in 2020 and subsequent years with the necessary investment in innovation.

The Bank Millennium Group also hopes to be able to launch this year a mortgage bank which will give the possibility of issuing covered bonds.