Santander Bank Polska assumes that for about 19.7% of foreign currency mortgages (active and repaid) a lawsuit has already been or will be filed against the group, the bank said. It anticipates that the vast majority of the projected cases will be filed by mid-2023.
The group estimated the probability of filing claims by borrowers of both active and repaid loans based on the number of lawsuits currently filed against the group and the estimated growth rate of the number of these lawsuits based on the statistical model built. The model assesses risk over a so-called lifetime horizon and is based on a number of behavioral characteristics related to the loan and the customer. The group assumes that for about 19.7% of loans (active and repaid) a lawsuit has already been or will be filed against the group. The assumptions made are highly sensitive to a number of factors from the environment, such as the development of the line of jurisprudence in Polish courts, the intensity of publicity for particular court decisions, the activity of intermediary law firms, the level of litigation costs, etc. The Group assumes that the vast majority of the projected cases will be filed by mid-2023, after which the number of new lawsuits will start to decline due to the expected ordering of the legal environment, according to the banks announcement.
As of September 30, 2022, the group has been sued in 11,190 proceedings relating to loans indexed or denominated to the CHF currency with a litigation value of PLN 3,175,984 thousand, including 2 class actions covered by the Class Action Law:
* a lawsuit filed against Santander Bank Polska concerning 559 loans indexed to CHF with the value of the subject of litigation of PLN 50,983 thousand.
* a lawsuit filed against Santander Consumer Bank concerning 31 loans indexed to CHF with a litigation value of PLN 38 thousand.
“As of 30.09.2022, the total impact of legal risk related to foreign currency mortgages in the group amounted to PLN 3,200,373 thousand , including:
* adjustment to gross carrying amount under IFRS 9 in the amount of PLN 2,846,686 thousand (including Santander Bank Polska S.A. – PLN 2,287,285 thousand and Santander Consumer Bank S.A. – PLN 559,401 thousand).
* provision recognized in accordance with IAS 37 in the amount of PLN 353,687 thousand (including Santander Bank Polska S.A. – PLN 266,411 thousand and Santander Consumer Bank S.A. – PLN 87,276 thousand” – it further reads.
“The total adjustment of the gross carrying value and the created provisions due to legal risk and legal provisions (for litigation and for the portfolio part) account for 34% of the active portfolio of CHF foreign currency loans. The change in the aforementioned provisions in January-September 2022 was due to, among other things, an influx of new litigation cases (a change of 2,716 cases compared to December 2021) and an update of the level of expected lawsuits, the bank also announced.
Santander notes that 2022 also saw an increased number of court rulings (within which the prevailing line of jurisprudence points to the invalidity of the loan agreement as a result of the abusiveness of the norms contained in the contract), although the number of finalised cases is still relatively small.
Source: Santander BP and ISBnews
