Financial and
ESG report 2020

Corporate Banking

Corporate Banking is a business line which provides professional and comprehensive services to companies generating annual sales revenues above PLN5 million, as well as public sector institutions and units.

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The Bank creates comprehensive financial solutions tailor-made to meet the unique needs of a specific client business supported by modern digital solutions shortening the time of client involvement in operational activities connected with a client’s Bank relationship. Our objective is to assure the highest quality of service and the shortest reaction time on the side of the Bank. Therefore, our internal processes relating to customer service have been consistently automated. At the same time in response to environmental challenges we support our clients in their implementation of projects reducing the environmental impact of their businesses – by financing projects connected with renewable energy, innovations reducing the demand for energy and natural resources and more effective waste management. 

In its 31 corporate centres the Bank employs top-class professionals guaranteeing a comprehensive service for corporate banking clients. Relationship Managers, who are the first line of contact with the client, are supported by product specialists in transactional banking, treasury products, trade finance products and leasing. Moreover, specialists in transactional systems and consultants who support our clients in operational issues are available locally. The team working with the Client is augmented by sector specialists and experts in M&A funding. 

Very high customer satisfaction with the quality of service is confirmed by the results of annual internal satisfaction surveys. In accordance with a study conducted in July 2020 the bank’s NPS ratio was 48 points, NPS for the Relationship Manager 78 points, while 87% of clients were very satisfied with the operational service provided by their consultants. 

At the beginning of the pandemic we focused on the one hand on maintaining the continuity of client service and on the other on reacting to our clients’ new needs connected with the changed situation relating to their business. Due to concerns for the safety of employees and clients direct contacts in the form of meetings were reduced, nevertheless the banking service was conducted to the full extent in all locations. Relationship managers, product specialists and corporate service consultants intensified in that period their contacts with clients through electronic and telephone channels, ensuring the continuity of support and banking service, as well as actively informing about assistance programmes for corporates. 

Already in early April there was introduced the possibility of using a qualified electronic signature for agreements, applications and certificates relating to loan agreements and security agreements, transactional banking, factoring, trade finance and treasury products. A remote and safe circulation of bank documents was thus provided, allowing both parties to avoid potential problems with transferring paper-based documents. In Q4 2020 43% of agreements were signed with the use of an electronic signature. In parallel we observed a rise in the use of remote channels in the full scope of their functionality. The number of Millenet users went up by 12.2% and of mobile application users by 15.8%. The number of additional bank accounts opened by our clients on their own in the internet application went up in 2Q20 to 87%, and the number of cards issued remotely is at the level of 50% and cash management applications 60%. There was also growing client interest in using electronic orders to issue a guarantee and open an L/C with the use of the online trade finance platform achieving the level of 90%.  The volume of transactions processed on the Forex Trader platform went up by 41% and exceeded at the end of the year PLN1 billion a month.   

The number of entrepreneurs using the services of automatic integration of financial and accounting systems with Millenet Link, the bank’s transactional system, grew five times. Accounting departments are provided with clear benefits, such as automatic (no need for logging into the banking system) feeding the accounting system with data on operations booked on accounts: loading statements of account, as well as downloading histories of operations at any time of a day or updating a balance.  

June saw the implementation of the principles relating to the suspension of credit liabilities developed by the Polish Bank Association on the basis of the EBA (European Banking Authority) guidelines. The implemented solutions constituted a joint approach of the Polish banking sector to the suspension of credit and leasing instalments, and factoring settlements for enterprises which had a good financial standing, but experienced temporary problems caused by the pandemic. 

The holidays were used by clients representing 2.1% of the loan portfolio. 

Loans with de minimis guarantee, dedicated to entrepreneurs from the SME sector, were modified in connection with the pandemic in order to more broadly provide companies with access to credit. The guarantee period was extended to 39 months for working capital loans and 96 months for investment loans, the guarantee limit was increased to 80% of the loan amount (maximum 3.5 million PLN) and the BGK commission was completely abolished. The programme originally planned to end on 31 December 2020 has been extended until 30 June 2021 on even better conditions – the maximum value of a guarantee increased to the equivalent of EUR3.5 million, while periods of lending extended to maximum 75 months for working capital loans and 120 months for investment loans, while maintaining a 0% commission for the first year of guarantee duration.  

A programme of loans with a guarantee of the BGK Liquidity Guarantee Fund was introduced as an element of the government’s anticrisis shield for medium-sized and large business entities. Guarantees secure up to 80% of the principal (maximum PLN200 million), with the maximum period of duration 27 months. The programme was extended until 30 June 2021. 

Medium-sized and large companies were also offered the option to conclude factoring transactions with liquidity guarantees provided by Bank Gospodarstwa Krajowego. The guarantee covers the repayment of the client’s liability resulting from a concluded reverse factoring agreement. This guarantee can be used by enterprises as part of applying for a new factoring limit or its extension or increasing. A guarantee is granted for a period no longer than 24 months up to 80% of the factoring limit (maximum PLN200 million, however this value is the joint limit of the available liquidity guarantee for loans and factoring). 

At the same time from July the bank’s offer was expanded by the variant of accepting a liquidity guarantee as security for a multiproduct limit agreement covering among others a line for guarantees and LCs, as well as for a revolving loan dedicated to disbursements under guarantees and LCs granted as part of a related line for guarantees and LCs. 

Another assistance instrument implemented in 2020 is the loan with subsidies to interest. Subsidies from the BGK Subsidised Interest Fund are granted for a period of 12 months from signing the agreement and are 2.2 pp for small and medium-sized enterprises and 1 pp for other enterprises. 

In connection with the implementation by the Polish Development Fund of the assistance programme for entrepreneurs (the so-called PFR Financial Shield) it took the Bank merely several weeks to build an electronic system for accepting applications for a subsidy, channel of automatic data transfer between the Bank and PFR, process of subsidy disbursements and consideration of complaints. The Bank actively supported its clients in the application process by sharing knowledge through dedicated www pages, webinars and Relationship Managers’ direct support in clarifying all doubts connected with the process of applying for subsidies. 

1,637 corporate banking clients used PFR assistance through the Bank. 

The Bank continues to develop electronic banking channels by implementing its client support strategy in terms of limiting and facilitating operations connected with the processing of settlements with the observance of highest security standards. There is a parallel development of both solutions based on direct interactions with users of internet and mobile banking, and host-to-host integrations allowing to automate information interchange between client systems and Bank systems. 

At the beginning of the year the Bank expanded in the internet banking system the functionality to verify information on the account in the register of the Head of the National Tax Administration under Art. 96b of the Act of March 11, 2004 on Tax on Goods and Services, the so-called White List, enabling automatic verification in the process of submitting a transfer, also in the case of orders submitted in the so-called batches of orders. There was also added the possibility of downloading a notification to the Tax Office containing information about a transfer which the Client must provide to the Tax Office. 

For clients expecting the cutting of costs and time, as well as elimination of errors through the automation of data interchange processes in factoring services the Bank introduced and further develops the functionality which enables direct communication between the financial accounting system of the client and the factoring system by means of network services. Thanks to this clients may report receivables for financing directly from the level of their financial and accounting system and receive in it feedback information about current settlements with counterparties.  

The Bank made available to its clients a new version of the Millennium Forex Trader currency exchange platform. The new platform was created with the use of modern technology (HTML 5) enabling more convenient and faster access in any browser without installing additional software. 

Also, a new manner of authorising transactions performed on the Internet with the use of payment cards was implemented. The 3D Secure 2.0 solution meets the strong client authentication requirements, this being authorisation with at least two different elements. Corporate banking clients are given the possibility of authorising internet transactions by means of passwords received as text messages and a dedicated password, while users of cards with access to Millenet for Corporates have the possibility of authorising transactions in the same manner as they log into Millenet. 

In the conditions of a pandemic the bank continued its education activities directed to clients, but limited them to remote forms. Numerous webinars were implemented, both organised on our own and with the bank’s partners such as CFO Club, BGK, PFR or Comarch. The subjects raised during the virtual meetings related to the areas of crisis management from the point of view of the CFO, digitalisation and automation in the area of finance, working capital management during the crisis, guarantee programmes for entrepreneurs, applying for PFR subsidies, cybersecurity, as well as macroeconomic issues. The Bank also continued its cooperation with the Forbes Family Firm Forum – initiative oriented to the integration and sharing of experience between the owners and persons managing the best family businesses in Poland. Bank Millennium’s monthly Bulletins were also cyclically published, containing information about legal and tax changes having an impact on the business of our clients, macroeconomic analyses and articles on selected products and services of the bank. 

Despite the limited market demand for financing, the volume of all credit products – loans to finance current needs, investment loans, leasing, trade finance products and products with the participation of EU funding  – remained in 2020 at the same level as last year – PLN18.6 billion net.  

Despite a drop of average utilisation of credit lines to 36%, which was connected with a record-high level of funds on Client accounts, the maintaining of the volume results among others from strengthening the Bank’s position in investment loans. 

In 2020 the Bank posted record-high growth rates in the factoring area. Realised factoring turnover stood in that period at PLN 23.2 billion, i.e. +10,4%. In terms of realised turnover value, the Bank was ranked 6th among the factoring institutions associated in the Polish Factors Association with an 8.0% market share. Factoring assets as of the end of 2020 were PLN2.85 billion. 

Bank Millennium added to its offer a new product, Receivables Financing, in order to augment the offer of credit and factoring products whose purpose is to provide the Client with funding backed by receivables which due to their limited marketability cannot be purchased by the Bank. 

Since October 2020 Bank Millennium has been also offering the option to conclude factoring transactions with a liquidity guarantee provided by Bank Gospodarstwa Krajowego. The guarantee covers the repayment of the client’s liability resulting from a concluded reverse factoring agreement.  

In trade finance a 6.3% growth was posted in the volume of granted guarantees and letters of credit, which reached the level of PLN904 million. 2020 was yet another year of growing popularity of e-guarantees; 39% of all issued guarantees were e-guarantees.  

In 2Q20 there was implemented a new version of the operating system used for processing guarantees and letters of credit, whose purpose is to facilitate the issuing of guarantees and documentary letters of credit through the use of new system functionalities. 

Corporate banking clients have access to a comprehensive offer of transactional banking products for companies, supported by an efficient and ergonomic internet banking system, mobile app and solutions based upon web service technology and SWIFT network. With respect to transactional products and services the Bank offers solutions in support of the management of receivables collection, payment settlements, liquidity management. The high quality of offered remote services led to a consistent growth of the transactional activity of Clients. 

The year 2020, due to a temporary introduction of administrative restrictions which have an impact on business operations of many sectors, showed much volatility of transactional activities. Compared to the previous year the total number of domestic settlements was maintained at the same level and the total number of foreign ones went up by 9.8%. At the same time due to a drop of retail sale and pandemic-related incentives to make cash-free payments the volume of processed cash fell 16.9% compared to the previous year (in the first quarter by 5.5,%, in the second quarter by 28%, in the third quarter by 14%, and the fourth quarter by 19%). Suspending by entrepreneurs their business travels and business travel expenses in the period of the pandemic pushed down the number of business payment card transactions by almost a half. Despite transaction volatility the volume of funds on current accounts of corporates supported by assistance programmes went significantly up and achieved in Q4 a record-high average balance of PLN12.23 billion (+69.8% y/y). The total value of funds deposited by corporate banking clients at the end of the year was PLN17.44 billion (+ 2.8% y/y), while the share of funds on current accounts in the deposit portfolio at the end of December reached a record-high share of 70.8%. 

Cuts of the base interest rate by 140 b.p. in the first half of the year significantly affected the deposit offer, which was adjusted to new market conditions. 

The Treasury Department offer includes a broad range of products: spot FX transactions, deposit products, FX risk management instruments (fx forward, fx swap, options) and interest rate risk management instruments (FRA, IRS, CIRS). 

Solutions offered by the Bank enable exporters and importers to hedge against FX risk and, thereby, properly calculate costs and prices. Customers also can hedge against the risk of deterioration of financial results due to adverse future changes of market interest rates. The proposed solutions facilitate the determination of the fixed cost of financing and inflow of interest without requiring any changes to be introduced to already existing loan or leasing agreements. 

In 2020 a 4% decrease of FX turnover for corporate banking clients was recorded, which resulted from the pandemic outbreak and restrictions on trade, in particular in the period of 2Q and 3Q 2020 with a simultaneous growth of profitability by 4%. 

In recognition of its FX treasury services Bank Millennium was hailed The Best Foreign Exchange Provider in Poland for 2021 in a competition organised for the 21st time by Global Finance Magazine. 

Bank Millennium provides custodial services on the basis of an individual permit issued by the Securities and Exchange Commission (now the Polish Financial Supervision Authority). The Bank is a direct participant of the deposit and settlement systems such as the National Deposit of Securities (kdpw_stream), NBP Register of Securities (RPW), Euroclear Bank SA/NV (Brussels) and Clearstream Banking Luxembourg.  

Custodial Department customers include domestic and foreign financial institutions (global custodial banks, banks – depositories of global depositary receipts, investment banks, asset management institutions, insurance companies, collective investment institutions, investment funds) and other legal persons actively participating in capital and money market transactions, requiring comprehensive and customised service and advanced ICT and infrastructural solutions. 

In terms of the number of domestic and foreign clients entrusting us with their assets, the Bank holds one of the top spots in Poland. The total value of assets on securities accounts of customers as on 31 December 2020 reached PLN 32.5 billion 

With respect to financing obtained on the international market, last year the Bank continued its collaboration and management of agreements concluded with International Financial Institutions including, primarily, the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB), which, as on 31 December 2020, covered as follows: 

  • agreement concluded with the EBRD in August 2018 on a medium term loan in the amount of 300 million PLN, granted by the EBRD under the PolGEFF (Polish Green Energy Financing for Leasing) project. Millennium Leasing is the borrower under this agreement, on the basis of a guarantee issued by Bank Millennium. Loan proceeds will be used by ML to finance leasing agreements connected with the purchase of machines and equipment contributing to the transformation of the Polish economy in the direction of the so-called ‘green economy’ including, in particular, in the area of energy and resource efficiency, renewable energy, water management and waste management. The loan will be paid back in full in August 2023. 
  • agreement concluded with the EBRD in November 2017 (by the former Euro Bank) on a medium term loan in the amount of PLN 40 million (with the option of expansion to PLN100 million), granted by the EBRD under the PolGEFF (Polish Green Energy Financing for Leasing) project. Funds from the loan have been made available to the Bank’s retail clients with the allocation for the implementation of purchases connected with the replacement or upgrading of the standard of selected equipment or installation, whose purpose is to reduce the consumption of energy (electric power or heat energy) and/or water in the housing real estate owned by them. The loan will be paid back in full in November 2022. 
  • loan agreement concluded in December 2016 with EIB, to the amount of EUR100 million with Millennium Leasing being the borrower and allocated for supporting activities in the area of financing leasing agreements concluded with companies from the SME sector. The loan was disbursed in four tranches in the period between June and December 2018. The loan balance at year-end 2020 was about EUR41.7 million.   

The Bank also continued projects connected with the multiyear process of strengthening the base of credible counterparties and partners on the interbank market, including, in particular, in the segment of instruments involving medium and long-term liquidity management in FX. One of the important aspects of the activities in the area was managing the portfolio of agreements with domestic and foreign banks (including agreements of ISDA and GMRA types) whose form requires regular adjustment to a changing regulatory environment and market standards. A considerable part of the activity was also connected with the finalisation of Brexit, broadly understood compliance issues (including growing demands in the KYC/AML area and sanctions), as well as with the identification and recognition of the structure and market of the instruments ultimately meeting the MREL criteria. 

Irrespective of the above activities, in the past period the Bank performed, on an on-going basis, all other tasks connected with the overall carrying out of international operations, in areas of implementing various objectives including, inter alia, processing payments and settlements, current financing of own needs and those of Bank clients, processing foreign trade transactions, participating in international money and FX market transactions, operating on the capital market. The achievement of these objectives was supported, to a large extent, by an almost thirty-year long process of developing the Bank’s cooperation with its foreign partners and counterparties. The Bank maintains ongoing contacts and relations with selected reputable correspondent banks and their units located in all important countries in terms of the structure of turnover of Polish foreign trade and non-trade transactions. 

In parallel to medium-term financing obtained on the international market, in several recent years the bank has successfully carried out senior debt issues denominated in PLN in the form of bonds placed among institutional investors on the domestic market (in 2014 at the nominal value of 500 million PLN, in 2015 300 million PLN and in 2017 300 million PLN), and subordinated debt (700 million PLN in December 2017 and 830 million in January 2019.) 

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