Corporate banking

In 31 corporate centres, the Bank employs top class professionals who provide comprehensive services to corporate banking customers. Relationship Managers, who are the first line of contact with the customer, are supported by product specialists responsible for transaction banking, treasury, trade finance and leasing products. Transaction system specialists and consultants are also available locally, supporting customers in any operational matters. The customer support team is supplemented by industry experts and merger and acquisition financing experts.

Very high customer satisfaction with service quality is confirmed by results of annual internal satisfaction surveys. In 2019, the NPS measure for the bank was 42, NPS for Relationship Managers – 75, while 89% of customers were very satisfied with the operational support provided by consultants.

Despite the limited demand for financing on the market, the volume of all credit products – loans to finance current needs, investment loans, leasing, trade finance products and products with the EU funds component – increased in 2019 by 7% y/y to reach the level of PLN 18.6 billion net. The growth was also observed in current financing (up 13% y/y) and investment loans (up 8% y/y).

In 2019, the Bank cooperated with BGK to introduce the possibility of applying for additional collateral for credit transactions in the form of Biznesmax guarantees while using the environmental path. If offers access to significant support for the execution of investment projects aimed at increasing energy efficiency.

The loan offering was also supplemented by a renewable facility, in which technology advancements allow for a fully-remote exchange of documents with the Bank. Additional projects are carried out to optimize credit processes, achieve automation and improve customer satisfaction.

2019 was a period of a considerable increase of the Bank’s exposure to specialized lending. That consisted of consortium transactions and specialized bilateral loans. Activity in the technology and telecommunications sector contributed the most to the portfolio growth. Significant part of the lending activity involved financing of commercial real estate and mergers and acquisitions. In 2020, the Bank plans to continue its current strategy, with particular focus on the financing of the RES sector.

In 2019, the Bank recorded further growth in factoring. The factoring turnover achieved in the period was PLN 21 billion. In terms of the value of the turnover, the Bank was ranked 6th among factoring institutions associated in the Polish Factors Association, with a 7.5% market share. At the end of 2019, factoring assets amounted to PLN 2.7 billion. We have also implemented changes in the handling of factoring transactions, aimed at achieving the optimum integration of factoring processes with lending processes.

In the trade finance area, a significant increase was observed in the amount of new limits; they went up by 36% y/y up to PLN 693 million. The value of the active guarantee and letter of credit portfolio reached PLN 878 million. In 2019, the popularity of e-guarantees increased and every fourth guarantee was issued in an electronic form (as an e-guarantee).

Corporate banking clients use a comprehensive range of transaction banking products supported by an efficient and ergonomic internet banking system, a mobile application and solutions based on the web service technology and SWIFT networks. With respect to transactional products and services, the Bank offers management of receivables collection, settlement of payments and liquidity management. The high quality of services drives a continuous increase of the customers’ transaction activity. In 2019, the number of domestic transfers increased by 3%, international by 8% and the number of card transactions by 7%.

In result of high quality of services offered and the increasing penetration of customer relations, the transaction rate grew further. In consequence in 2019 this brought growth of the volume of funds on current accounts, reaching the record-high level of PLN 11.4 billion (+19% y/y) in December. The total value of deposits of business customers (including SME) was PLN 20.4 billion, growing 10% in annual terms.

In 2019, the Bank introduced important changes in its electronic banking channels, driven by its business strategy as well as changes in the applicable law. The key assumption was a parallel development of online channels in the areas of direct interaction with customers (mobile and internet banking) and host to host integration, which enables automated exchange of information.

In August, the Bank offered the customers a hardware token with a code reader, an innovative device that may be used to log in and authorize orders. That was the first solution in Poland based on the proprietary Cronto technology by OneSpan. The device offers the highest level of security and good user experience that is unique for devices of this type. The implementation of the new solution was preceded by user testing, which confirmed the comfort and ease of the use of the device.

In December, as one of the first banks, Millennium launched a function that offers verification of an account on the white-list of VAT taxpayers directly in the transfer form in the electronic banking system. This service shortens considerably the time that a business needs to effect a transfer to a business partner (before the service was launched, verification of an account on a taxpayer white-list was an additional and time-consuming activity).

During the same period, by making appropriate changes in the process of managing payments in internal and client applications, the Bank completed the work related to the “Witraż” project implemented by the Ministry of Finance. By doing that, it implemented a dedicated micro-account for tax payments for each taxpayer. It is an intuitive process, which informs the customer which account should be used for a specified form. For example, if VAT is handled then the system notes that an Individual Tax Account should be entered (including a micro-account of the tax office assigned to the customer). It is possible to record it in the system, which makes it much easier to pay taxes in the future. For example, if the form name is “other” then the system displays the account number depending on the tax office selected by the customer.

In cooperation with Millennium Leasing, the Bank developed an internet module for servicing leasing products, available to customers as a section of the Millenet system. The module offers an online view of the key information on leasing agreements, related insurance products and also browsing invoices and payments for invoices.

The Bank systematically develops its IT systems to ensure that they support the accounting and financial processes carried out by customers as efficiently as possible. Within the Millenet Link service, which is a direct communication channel with ERP (Enterprise Resource Planning) systems of the largest corporate clients, the Bank enables integration of its services with the client’s systems. In this area, Millennium cooperates with the leading manufacturers and companies implementing ERP systems on the market (Comarch, SAP, SAGE, Microsoft). As a result, the integration process is faster and easier and happens on specially-negotiated preferential terms. Since 1 July, as a result of cooperation with Comarch, all users of its systems have been able to integrate with the Bank’s system directly in their applications without incurring the cost of individual integration. Since June, Millenet Link has also enabled the transfer of authorized orders using an electronic signature with a qualified digital certificate, which supports automation of payments at the client’s side. As one of the first banks on the market, Millennium also launched a solution that automatically communicates the client’s accounting and financial system with the Bank’s factoring application.

In June, the Bank published its special open banking access interface based on the PolishAPI standard. It is one of the elements of adapting the banking services to the requirements of the PSD2 directive and the Payment Services Act of 20 June 2019. The interface allows the Bank’s customers to access all the services required by law (payment initiation, account history inquiry, confirmation that funds are available on an account linked to a payment card) via certified third parties.

In March 2019, in the mobile application for corporates, the Bank launched a foreign transfer management function. Similarly as in the internet banking website, the users are now able to select the procedure used to execute the transaction, transfer dates and a negotiated exchange rate. In each instance, the customers are informed about the costs of making the transfer according to the selected settings. The number of companies using the mobile application continues to grow and the number of users has already reached nearly 10 thousand.

In April, Millennium Mastercard Corporate Executive charge cards were added to the payment card offering. The card combines a corporate payment card with a bundle of privileges, available previously only to the most affluent individual clients. The new card was designed to ensure comfort and safety of management board members and business owners who travel frequently. It offers numerous unique benefits, such as access to exclusive airport lounges, a broad range of concierge services, insurance as well as Priceless Specials and Inspirations programs.

Regulatory changes implemented by the Bank in the corporate banking system:

• PSD2 – adaptation to the Act of 10 May 2018 amending the Payment Services Act and certain other acts (Journal of Laws 2018, item 1075) coming into force on 14 September 2019. The act concerns the implementation of the PSD2 and new technical standards for strong customer authentication and common and secure open standards of communication.
• White List – alignment with the Act of 9 February 2019 amending the Value Added Tax Act. This refers to tax sanctions for payments to accounts from outside of the list kept by the Ministry of Finance.
• Split payment – alignment with the Act of 19 July 2019 amending the Value Added Tax Act and Certain Other Acts, i.e. mandatory split payment mechanism for selected groups of goods.
• CBP 2019 – alignment with Regulation (EU) 2019/518 of the European Parliament and of the Council of 19 March 2019 amending Regulation (EC) No 924/2009 as regards certain charges on cross-border payments in the Union and currency conversion charges (transfers in Euro (SEPA) from business accounts).
• Witraż by the Ministry of Finance – alignment with the Act of 4 February 2019 amending the Value Added Tax Act and Certain Other Acts (Journal of Laws of 2019 Item 1520). This refers to the introduction of individual tax accounts (IRP) or tax micro-accounts, which will replace the existing accounts assigned to the individual Tax Offices.

The Bank continued to build its brand on the corporate banking market by sharing the knowledge of important financial, tax, legal and market matters with companies. It also co-organized events offering the opportunity for the corporate customers to share their experiences with each other.

In 2019, it cooperated among other with the “Forbes” in two strategic initiatives: as a strategic partner for the Family Business Forum and the twelfth edition of Forbes’ Diamonds, which included a ranking of polish companies prepared by the magazine.

Forbes’ Diamonds – this year’s edition started with the debate entitled “Financing development and innovation in Polish companies” with the participation of a Bank Millennium representative. During regional galas, awards were given to the companies, which increased their value the fastest over the last three years. The meetings also featured discussion panels with Bank Millennium and Millennium Leasing representatives, devoted to the topic of financing innovation growth. The Bank’s chief economist delivered his presentation on barriers and opportunities that Polish economy faces.

Forbes’ Family Business Forum is a long-term project organized by the magazine’s editors, in which the key element is the ranking of family businesses developed in cooperation with Bisnode. Its goal is to support and integrate family businesses, enable exchange of experience and to reward the best. During the regional meetings of this year’s edition of the Forum, the Bank’s representatives shared their knowledge and experience in discussion panels and through a presentation entitled “From a charismatic founder to a creativity culture in a family business”.

The Bank continued its cooperation with the CFO Club established by the publisher Harvard Business Review Polska with the mission of sharing knowledge, facilitating exchange of experience and providing tools to modern CFOs. The club has more than 400 members throughout Poland. As part of the Club, the Bank’s representatives participated in meetings, prepared publications and co-run two webinars (“How to maintain liquidity in a volatile environment?” and “Alternatives to credit: where to get money for your business”). Three club meetings were held devoted to strategic risk management in companies, cyber security from a CFO’s perspective and development of leadership skills by CFOs and financial officers in the company. Meetings of the CFO Club offer their participants not only knowledge and substantive value, but are also a priceless opportunity to establish business relations and exchange experiences.

The offer of the Treasury Department covers a broad range of products: spot foreign exchange transaction, deposit products, exchange rate volatility risk management instruments (FX forwards, FX swaps, options) and instruments to manage interest rate volatility (FRA, IRS and CIRS transactions).

The solutions offered by the Bank enable importers and exporters to hedge FX risk, and thereby to calculate their costs and prices correctly. Clients also have the ability to hedge the risk of deterioration in their financial performance as a consequence of unfavourable movement of market interest rates in the future. The proposed solutions allow clients to adopt a fixed cost of financing and interest proceeds and do not require any amendments to the existing loan or leasing agreements.

In 2019, the Treasury Department recorded a 3% increase in the group of very active corporate clients, which entailed an increase of foreign currency volumes by 8%, while profitability fell by 3%.

Bank Millennium provides custody services based on an individual permit from the Polish Securities and Exchange Commission (currently Polish Financial Supervision Authority) The Bank is a direct participant in depository and clearing systems such as the National Depository for Securities (kdpw_stream), the NBP’s Register of Securities (RPW), Euroclear Bank SA/NV (Brussels) and Clearstream Banking Luxembourg (Luxembourg).

The Custody Department’s clients are domestic and international financial institutions (global custody banks, promoters of global depository receipt issues, investment banks, asset management institutions, insurance companies, mutual fund institutions, investment funds) as well as other legal persons actively participating in capital market and money market operations who require comprehensive and customized service and advanced telecommunications and IT and infrastructural solutions.

The Bank holds a leading position in Poland in terms of the number of domestic and international clients who entrust their assets to us for custody purposes. As at 31 December 2019, the value of assets on clients’ securities accounts stood at PLN 37.7 billion. At the end of 2019 the Bank operated 13,077 securities accounts and deposit accounts and acted in the capacity of Custodian for 25 Investment Funds and for one fund it performed the statutory role of a liquidator.

In the context of the pension system reform introduced in 2019, in which legal grounds were created for the operation of Employee Capital Schemes (PPKs) in the form of a special group of specialized open-end investment funds (SFIO), the Banks shows growing activity in serving as a custodian of PPK investment funds and provide transaction handling services.

In respect to the financing raised on the international market, last year the cooperation and management of the agreements signed with international financial institutions were continued, especially the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB), which as at 31 December 2019 included the following:

• agreement concluded with EBRD in August 2018 concerning a medium-term loan for PLN 300 million extended by EBRD under the PolSEFF Leasing project (Polish Sustainable Energy Financing Facility for Leasing). Under the agreement, the borrower is Millennium Leasing based on the guarantee extended by Bank Millennium. The funds raised within a loan are used by ML to finance leasing agreements related to the purchase of hardware and devices contributing to the transformation of the Polish economy towards the so-called “green economy”, in particular in respect to the efficiency of using energy and resources, renewable energy, water management and waste management. The final maturity of the loan will be in August 2023.
• agreement concluded with EBRD in November 2017 (by the former Euro Bank) concerning a medium-term loan for PLN 40 million (with an option of expansion to PLN 100 million) extended by EBRD under the PolSEFF Leasing project (Polish Sustainable Energy Financing Facility for Leasing). Proceeds from the loan were made available to the Bank’s retail clients, to be used for purchases related to the replacement or upgrade of selected equipment or installation in order to reduce consumption of energy (electricity or heat) and/or water in their residential properties. The final maturity of the loan will be in August 2022.
• agreement concluded with EBRD in December 2015 concerning a medium-term loan for EUR 50 million extended by EBRD under the PolSEFF Leasing project (Polish Sustainable Energy Financing Facility for Leasing). The funds from this loan will be made available to the Bank’s clients using funding in the form of leasing (through Millennium Leasing), designated to carry out investments to enhance the energy efficiency of the machinery and equipment used and to reduce the costs of energy used. The final maturity of the loan will be in December 2020.
• loan agreement concluded in 2016 with EIB in the amount of EUR 100 million, in which Millennium Leasing is the borrower, designated for the support of financing of lease agreements signed with SME sector companies. The loan was disbursed in 4 tranches in the period between June and December 2018. The last instalments within the individual tranches will be repaid in 2025.

The Bank also continued undertakings related to the process in progress for many years of strengthening the base of credible counterparties and partners on the interbank market, especially in the segment of instruments related to managing medium and long-term liquidity in foreign currencies. One of the important aspects of activities undertaken in this area was management of the portfolio of agreements with domestic and international banks (including ISDS and GMRA type agreements), whose design requires regular adaptation to the changing regulatory environment and market standards.

In this context, the Bank carried out, among others, activities related to the implementation of the further stages of the EMIR regulation, as well as the selected requirements and standards applicable internationally and/or in the states, in which its main international business partners have their headquarters. An important portion of activity in this area was related to Brexit (and preparation of the Bank for different possible dates and scenarios), to broadly defined compliance matters (including the increasing challenges in the KYC/AML and sanctions area) and identification and recognition of the structure and market of instruments to ultimately satisfy the MREL criteria.

Irrespective of the above activities, in the past period the Bank performed its other international tasks on an ongoing basis, in order to achieve diverse objectives, which included, among others, handling the service of payments and settlements, ongoing satisfaction of own and clients’ financing needs, handling foreign trade transactions, participating in operations on the international money and FX markets, operations on the capital market. The achievement of these goals was supported largely by the process of developing the Bank’s cooperation with its foreign partners and business associates, which has been continuing for over thirty years. The Bank maintains relationships and contacts on an ongoing basis with several hundred correspondent banks and their outlets located in all countries of the world that are important in the context of Polish foreign trade and non-commercial transactions.

In parallel to medium-term financing raised on the international market, in recent years the Bank successfully issued senior debt denominated in PLN in the form of bonds placed among institutional investors on the domestic market (with the nominal value of PLN 500 million in 2014, PLN 300 million in 2015 and 300 million in 2017) as well as subordinated debt (PLN 700 million in December 2017 and PLN 830 million in January 2019).