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Comment of Bank Millennium regarding CJEU ruling in individual FX mortgage case of another bank issued on 3 October 2019

03.10.2019

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We approach with attention today’s answer of the Court of Justice of the European Union (CJEU) to questions raised by the District Court in Warsaw in the FX loan matter of an individual client of one of Polish banks.
  • The decision on this particular individual case will be reviewed by the District Court in Warsaw and we assume that finally by the Supreme Court, which will issue ultimate verdict. We will closely monitor the final decisions.
  • In accordance with the opinions of recognized authorities of law, it is worth noting that the ruling of the CJEU refers to the circumstances of one individual case and will not be automatically applied to all case resolutions. It will be the Polish courts, which will take the final decisions not only on the basis of EU regulations interpreted by this ruling of the CJEU, but also taking into account national regulations, not disregarding interpretations of Polish courts in this respect. Such considerations shall be performed based of as well as specificities of every case. The way it will impact the line of judgement of Polish courts will be visible in years, it is too early for any predictions now.
  • Referring to the impact of CJEU decision on the judgements of Polish courts we are highlighting three important issues:
  1. Specificities on the contract and the bank practices of this case cannot be translated to Bank Millennium cases, practices and contracts. The agreements applied by Bank Millennium (namely the possibility to pay the instalments in CHF) differ from the agreements used by other banks, including the bank whose agreement is subject to the decision of the CJEU. These differences will be analysed in the framework of separate court proceedings reviewing contracts concluded by Bank Millennium. Similarly, Bank Millennium sales practices as well as the circumstances regarding the conclusion of a specific contract are of significance, which precludes direct transfer of the CJEU decision to Bank Millennium contracts.
  2. The abusiveness of the FX calculation cannot be translated to abusiveness of the loan indexation to CHF. CJEU does not question the whole indexation mechanism. The credit agreement, which was to be tied to FX, was a fundamental assumption of the agreement. There is a way to set an exchange rate grounded in Polish law - it is the average NBP rate and such possibility in our opinion has not been challenged. We already have second instance ruled cases, in which the judge decided that we should use the average NBP rate – latest one issued this week, on 30 September 2019.
  3. Each case is an individual case, each client has a specific situation that needs to be presented to a Polish court. An important analysis of each case are the circumstances regarding the specific customer of the bank who is a party to the contract. The ability of a particular client to comprehend the essence of the concluded contract, has a meaning that cannot be omitted.
  • So far the final court resolution in indexation cases were, except one, in favour of Bank Millennium. Since the beginning of the year, we have not observed a sharp increase in the number of litigation claims brought by CHF clients. Bank in every case will defend its rights to the final stage. According to the Association of Polish Banks, data gathered from major banks indicate that 2% of customers claims are in courts. Until now there are ca. 1,000 final positive resolutions for banks and ca. 100 against banks.
  • We have been also focusing on reduction of our FX mortgage portfolio, mainly by encouraging our clients to repay their loans early. Court litigations concern a low percentage of our clients, while as regards the remaining clients, i.e. the overwhelming majority, the bank has been constantly in touch with them since 2015. Taking into account their individual situation, we offer favourable solutions for conversion of FX loans into PLN or attractive early repayment terms. Currently, this effort and the natural pace of repayment allow us to reduce the CHF portfolio by approx. 8% per year, and soon it will fall below 20% of total loans.