Settlements and other solutions for foreign currency loan borrowers

For many years, Bank Millennium has been consistently following the strategy of seeking and implementing amicable solutions to resolve problems related to mortgage loans indexed to or denominated in Swiss francs. The solutions offered to clients are customized to their needs and are aimed at, among others, making it easier for borrowers who repay a loan in Swiss francs to convert the currency of the loan (i.e. change the repayment currency to Polish zloty) or repay the loan on favorable terms and conditions. The Bank makes efforts to limit the formalities associated with these orders to the necessary minimum.

Since 5 May 2020, orders given by clients with mortgage loans indexed to or denominated in Swiss francs (including repayment of loan installments), have been fulfilled by Bank Millennium using the exchange rate equal to the average exchange rate of the National Bank of Poland for Swiss francs published in Table A – Average foreign currency exchange rates.

Since January 2015, when quick increase of the Swiss franc exchange rate was recorded, Bank Millennium has been offering special solutions comprising the so-called “six-pack”, including:

1. Accepting a negative LIBOR rate for calculating the interest rate for mortgage loans.
2. A significant reduction of the so called exchange rate spread, which causes a perceivable decrease in the amount of loan installments paid by clients (replaced with the average NBP exchange rate in 2020)
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 is only slightly higher than before the exchange rate was freed. Such requests were only available to the borrowers residing in the financed property.
4. Resignation from demanding new collateral and loan insurance from borrowers who repay loan installments on a timely basis.
5. Allowing borrowers to convert the loan currency from CHF to PLN at the exchange rate equal to the average exchange rate published by the NBP (standard offer).
6. Making the rules for mortgage loan restructuring more flexible for clients residing in the financed properties.

The borrowers who are Bank Millennium clients may also receive aid from the Borrower Support Fund designed for the individuals, who experience financial hardships and are obligated to make repayments of mortgage loan installments (irrespective of the loan currency) constituting a substantial burden on the household budget.

A borrower who has been awarded such support will receive monthly funds to cover the repayment of a loan installment. The funds are paid for a period no longer than 36 months in the amount corresponding to the loan installment amount, but no more than PLN 2,000. If the amount obtained from the sale of the real property is not sufficient for full repayment of the mortgage loan, a borrower may receive a debt repayment loan (zero-interest form of aid) in the maximum amount of PLN 72,000. Repayment of the aid received begins two years after the last part of the support or debt repayment loan is paid out and is divided into 144 installments with no interest. A portion of the amount may be forgiven, provided that repayments are made on a timely basis.

The money at the Fund’s disposal are contributed by banks and, according to information provided by Bank Gospodarstwa Krajowego, at the end of September 2021, their balance was PLN 607.4 million.

As at 31 In December 2021, the Bank had 11,070 loan agreements and additionally 913 loan agreements from the former Euro Bank that were the subject matter of currently pending individual lawsuits – these figures do not include claims filed by the bank against clients, i.e. collection cases. 94% of the loan agreements are adjudicated before first instance courts and 6% before second instance courts.

The Bank is a party to a class action lawsuit filed in 2014 seeking to establish the Bank’s liability for unjust enrichment in connection with the concluded foreign currency mortgage loans. This is not a lawsuit seeking any payment. A ruling in these proceedings will not award any amounts to the members of the group. There are 3,281 loan agreements included in these proceedings. At this stage, the composition of the group has been established and confirmed by the court. The proceedings have entered the phase of examining the merits.  In the meantime, more than 6% of the loan agreements under this class action were subject of settlements (regarding conversion to PLN or early repayment) between the Bank and the borrower under the settlements process above described.

[GRI 103-1], [GRI 103-2], [GRI 103-3], [GRI 206-1] A report on court cases, including proceedings related to cases of restricting competition, can be found in the chapter entitled “Court cases” in the Annual Financial Statements of the Capital Group of Bank Millennium S.A. for the 12-month period ended on 31 December 2021.