mBank

mBank
direct bank
Founded November 26, 2000 (2000-11-26)
Founder Sławomir Lachowski
Headquarters Łódź, Poland
Owner Commerzbank
Parent BRE Bank
Website www.mbank.pl
The logo variant used for corporate customers

mBank is a Polish direct bank, part of former BRE Bank (owned by Commerzbank). mBank was launched as a greenfield venture in 2000 and started its operations on November 26, 2000. 10 years later (by Q3 2010) it had acquired 2.5 million customers and had 14 billion PLN deposits and 13.1 billion PLN in loans.[1] It is currently the 3rd largest retail bank in Poland in terms of number of customers. It also operates in the Czech Republic and Slovakia.

The current BRE Bank CEO is Cezary Stypułkowski. mBank's General Manager is Pawel Kucharski.

The design of the web service is aimed at making online banking more functional and user friendly. The service uses HTML 5 and "UI tricks" to achieve this.[2]

Timeline

Controversial foreign loans involvement

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.[3] However, in July 2011, the Polish banking law was amended[4] 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 Office of Competition and Consumer Protection.[5]

Since for the Europan Council Directive 93/13/EEC of 5 April 1993,[6] 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.[7]

One of the side effects of the raising exchange rate is growth in the Loan-to-Value ratio of the foreign loans. Till 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%.[8] Loans with LTV over 80% are deemed more risky, especially when the changes in LTV are not related to the property value but a uncontrolled by both bank and debtor factor, such as foreign exchange rate.

As of the end of 2015, mBank held equivalent of around 5 billion CHF of Swiss Franc linked loans and had 3 billion CHF obligations to Commerzbank.[9]

See also

MBank is also the name of a community bank headquartered in Gresham, Oregon. MBank has three branches throughout the Portland, Oregon metro area.[10] The Oregon's MBank is not affiliated with the Polish mBank.

References

  1. ↑ mBank wants to acquire 277 000 new clients in 2011
  2. ↑ "MBank And The Future Of Responsive Banking".
  3. ↑ "Spready - mBank niedozwolone". sites.google.com (in Polish). Retrieved 2016-03-03.
  4. ↑ "Banking Law amendment, July 29th, 2011" (in Polish). Retrieved 2016-03-03.
  5. ↑ "Office of Competition and Consumer Protection register - clause 5743" (in Polish). Retrieved 2016-03-03.
  6. ↑ "EUR-Lex - 31993L0013 - EN - EUR-Lex". eur-lex.europa.eu. Retrieved 2016-03-03.
  7. ↑ "Wierzbowski Eversheds > Grupa na Bank (archived)" (in Polish). 2015-08-01. Archived from the original on August 1, 2015. Retrieved 2016-03-03.
  8. ↑ "mBank financial reports". www.mbank.pl (in Polish). Retrieved 2016-03-04.
  9. ↑ "mBank annual report 2015" (in Polish). March 2016. Retrieved 2016-03-04.
  10. ↑ "About | MBANK". MBank. Retrieved 2016-03-03.

External links

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