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mBank

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mBank SA
FormerlyBank Rozwoju Eksportu
BRE Bank
Company typePublic company
ISINPLBRE0000012
Founded1986; 38 years ago (1986)
FounderKrzysztof Szwarc
HeadquartersMennica Legacy Tower,
Warsaw
,
Poland
Area served
Poland, Czech Republic, Slovakia
Key people
Cezary Stypułkowski
Services
OwnerCommerzbank
SubsidiariesmAccelerator, mBank Hipoteczny, mElements, mFaktoring, mFinanse, mInvestment Banking, mLeasing, LeaseLink, mServices
Websitewww.mbank.pl

mBank SA (formerly BRE Bank), set up in 1986, and originally BRE – Bank Rozwoju Eksportu (Export Development Bank), is Poland's fourth largest universal banking group in terms of total assets and loans, and fifth by deposits at the end of September 2016. It offers retail, corporate and investment banking as well as other financial services such as leasing, factoring, insurance, financing of commercial real property, brokerage operations, wealth management, corporate finance and advisory in the scope of capital markets.

Since 1992, it has been listed on the Warsaw Stock Exchange. In 2007 it started its retail operations in the Czech Republic and Slovakia.[1]

The current mBank CEO is Cezary Stypułkowski.

mBank Group

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mBank Group is composed of:

  • mLeasing, one of Poland's leading leasing companies[citation needed]
  • mBank Hipoteczny, Poland's largest mortgage bank[citation needed]
  • mFaktoring, an invoice factoring business
  • mCentrum Operacji, a subsidiary providing back office services to other subsidiaries of mBank Group
  • mCorporate Finance, a subsidiary specialising in investment banking services
  • mLocum, a property developer
  • mFinanse (formerly Aspiro), a subsidiary providing financial advisory services
  • mFinance France
  • mElements, a subsidiary specialising in e-commerce and API banking

In 2016 mBank's subsidiaries Dom Maklerski mBanku and mWealth Management become part of mBank;

Presidents

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History

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mBank in Prague, Czech Republic
BRE Bank in Bydgoszcz, 2013

The bank was founded in 1986 as Bank Rozwoju Eksportu (Export Development Bank), a joint-stock company. Three years later BRE Bank was granted credit lines from the World Bank and IFC and became a member of SWIFT.[6]

In 1990, BRE Bank was privatised through public offering.[7] The BRE Group set up its first subsidiaries: Biuro Maklerskie BRE Brokers (now mBank Dom Maklerski) and BRE Services (now mLeasing). In 1995, the bank launched its Private Banking, and in 1997 Towarzystwo Funduszy Inwestycyjnych SKARBIEC, an investment fund company, was set up. In 1999, BRE established PTE Skarbiec-Emerytura, a pension fund.[8]

In 1994, it signed an agreement on strategic partnership with Commerzbank. In 1998, BRE Bank merged with Polski Bank Rozwoju S.A.[9]

In 2000, BRE bank started operations in the retail banking segment, launching mBank, the first Internet bank in Poland. In 2001 it launched its second retail arm, MultiBank.[10] In 2013, MultiBank, BRE Bank and mBank were replaced by the single mBank brand.[11]

In 2014, mBank launched Orange Finanse, a mobile retail bank.[12] In 2015, mBank entered into long-term cooperation with AXA Group.

In September 2019 mBank's parent company Commerzbank announced they wanted to sell their 69.3 percent stake in the bank.[13] In early 2020, Commerzbank then abandoned their plans, as they were not able to sell under favorable conditions due to the Covid-19 pandemic.[14]

Controversial foreign loans involvement

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mBank is one of the top three Polish banks that have been granting foreign mortgage loans. Between 2002 and 2014 mBank granted more than 70,000 such loans. A great majority of them are Swiss Franc linked. As a consequence of the financial crisis of 2007-08, Swiss Franc has significantly strengthened to Polish zloty. In case of some loans granted by mBank in 2008, their value increased twofolds.

mBank marketed Swiss Franc linked loans as much cheaper to their local equivalents. Indeed, the LIBOR rate was lower than the Polish WIBOR rate. However, when adjusted for foreign exchange effect, the cost of these loans, and especially the amount of the debt, become excessive.

mBank did not inform its clients about the full extent of the risk connected with these loans. mBank management claims it itself did not assess the risk correctly.

mBank received about 7 billion CHF in short-term loans from its parent company Commerzbank to finance its foreign mortgage loans. Initially – in 2006 and 2007 – the loans from Commerzbank were granted with a very low interest margin of 0.15%. However, the margin was increased to approximately 2.0% when they had to be renewed. Since many of the early loans granted by mBank to its customers had their margin of around 1.0%, these loans have become margin negative (i.e. unprofitable) for mBank.

For a number of years mBank was able to manage this loan unprofitability by charging debtors installment fees, so-called "spreads". These spreads were used by mBank to compensate low interest rates.[15] However, in July 2011, the Polish banking law was amended[16] to eliminate such additional payments.

In addition, clauses regulating linkage between Swiss Franc and Polish Zloty in the loan agreements used by mBank were found unfair and included in the unfair clauses register maintained by the Office of Competition and Consumer Protection.[17]

Since the European Council Directive 93/13/EEC of 5 April 1993,[18] contract terms found to be unfair should not bind consumers, the linkage between Swiss Franc and Polish Zloty present in mBank agreements was undermined.

However, mBank has not recognized the validity of this regulation. Therefore, a number of legal proceedings ensued, including a class action lawsuit started by 1,247 debtors.[19]

One of the side effects of the raising exchange rate is growth in the loan-to-value ratio of the foreign loans. Until 2008, the average LTV ratio for mBank's foreign mortgage loans was in the 60s. Later it increased to over 80% and currently stands at 82.2%.[20] Loans with LTV over 80% are deemed more risky, especially when the changes in LTV are not related to the property value but uncontrolled by both bank and debtor factor, such as foreign exchange rate.

As of the end of 2015, mBank held the equivalent of around 5 billion CHF of Swiss Franc linked loans and had 3 billion CHF obligations to Commerzbank.[21]

It was announced in July 2019 that Commerzbank was being investigated by the European Central Bank and BaFin for facilitating its subsidiary mBank's toxic financial product offering in Poland, as well as for the linked potential tax evasion resulting from Commerzbank's financing of mBank's CHF-linked toxic financial products.[22][23]

References

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  1. ^ "Summary of the year". www.mbank.pl. Retrieved 2016-12-14.
  2. ^ "Boryszew powołanie osoby nadzorującej". Bankier.pl (in Polish). 2003-12-08. Retrieved 2023-01-19.
  3. ^ "S. Lachowski zostanie nowym prezesem BRE, Kostrzewa odchodzi". Parkiet (in Polish). Retrieved 2023-01-19.
  4. ^ "Grendowicz pokieruje BRE Bankiem". TVN24 Biznes (in Polish). Retrieved 2023-01-19.
  5. ^ a b "Stypułkowski zastąpi Grendowicza w BRE". Parkiet (in Polish). Retrieved 2023-01-19.
  6. ^ "Introduction to mBank Group" (PDF). mBank. 2022. Retrieved 2023-02-11.
  7. ^ "Jak prywatyzowano polskie banki?". gazetapl (in Polish). 2011-11-08. Retrieved 2023-08-22.
  8. ^ "PTE Skarbiec-Emerytura przejął Ego". biznes.interia.pl (in Polish). Retrieved 2023-08-22.
  9. ^ "22 banki, których już nie ma. Pamiętacie je wszystkie? Historia konsolidacji polskiej bankowości". www.cashless.pl (in Polish). Retrieved 2023-08-22.
  10. ^ Polska, Grupa Wirtualna (2002-05-09). "Multibank - na parkiet jeszcze nie teraz". www.money.pl (in Polish). Retrieved 2023-08-22.
  11. ^ "Od poniedziałku mBank zastąpi Multibank i BRE Bank". forsal.pl (in Polish). 2013-11-22. Retrieved 2023-08-22.
  12. ^ "Orange Polska and mBank launch joint mobile service". commsupdate.com. Retrieved 2023-08-22.
  13. ^ "Good if mBank sold to investor not already in Poland: CEO". Reuters. 2020-02-06. Retrieved 2023-08-22.
  14. ^ "Covid-19 scuppers Commerzbank plan to sell mBank". Finextra Research. 2020-05-11. Retrieved 2023-08-22.
  15. ^ "Spready - mBank niedozwolone". sites.google.com (in Polish). Retrieved 2016-03-03.
  16. ^ "Banking Law amendment, July 29th, 2011" (in Polish). Retrieved 2016-03-03.
  17. ^ "Office of Competition and Consumer Protection register - clause 5743" (in Polish). Retrieved 2016-03-03.
  18. ^ Consolidated text: Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts
  19. ^ "Wierzbowski Eversheds > Grupa na Bank (archived)" (in Polish). 2015-08-01. Archived from the original on August 1, 2015. Retrieved 2016-03-03.
  20. ^ "mBank financial reports". www.mbank.pl (in Polish). Retrieved 2016-03-04.
  21. ^ "mBank annual report 2015" (in Polish). March 2016. Retrieved 2016-03-04.
  22. ^ "Commerzbank pociągnięty do odpowiedzialności za frankowe grzechy mBanku". 23 July 2019.
  23. ^ "Sprzedaż mBanku. Niemcy chcą komuś podrzucić zgniłe jajo w postaci frankowiczów". 1 October 2019.
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