Bank Millennium reinforces provisions for risks regarding FX mortgage loans
BCP's bank in Poland said it had increased provisions as it continued to register negative trends in court decisions, concerning the so-called "Francowicze" case.
BCP revealed on Wednesday that its bank in Poland has decided to create PLN 700 million (around €160 million) of provisions to address legal risks connected with FX mortgage loans in foreign currency originated by Bank Millennium and also by Euro Bank, acquired in 2019.
As a result, the Polish bank controlled 50.1% by BCP will register losses in the fourth quarter, “despite solid operating performance”, according to a statement sent to the market. The financial results will be published on February 1, with the bank promising to provide “more information about legal risks”.
Bank Millennium said it had increased provisions as it continued to register negative trends in court decisions, at the same time as new lawsuits have been filed and the bank itself has made changes to its legal risk assessment methodology.
In fact, due to the contingencies related to this case, the bank had already set aside €400 million. A cushion that is now “fattened” with another €160 million.
In September last year, the local press reported that Bank Millennium had closed deals with 4,000 clients with mortgage loans in Swiss francs, representing about 8% of the total foreign currency mortgage portfolio.
These risks are related to the so-called “Francowicze” case. In the 2000s, Poles borrowed in Swiss francs to benefit from a strong zloty and low-interest rates in Switzerland. However, with the crisis, the Swiss currency soared on the foreign exchange market, pushing up the value of household debts to unpayable levels. Many have gone to court in recent years to contest these debts.
