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By Marcin Goclowski
WARSAW, Jan 19 (Reuters) - Polish banks should cut the mortgage rates they charge borrowers because the surge in the value of the Swiss franc against the zloty requires “extraordinary” measures, central bank chief Marek Belka said on Monday.
The franc jumped on Thursday to 4.2 zlotys from 3.6 following the Swiss National Bank’s decision to scrap its cap on the currency, piling pressure on the government, which faces an election in October, to provide relief for borrowers.
The central bank may discuss the Swiss move at its regular meeting on Tuesday, a council member said, and separately Belka is due to meet Finance Minister Mateusz Szczurek and the heads of banks that have granted the most foreign exchange mortgages.
Poland’s stock of Swiss franc-denominated mortgages stood at about $36 billion at the end of November - almost 8 percent of gross domestic product in central Europe’s biggest economy.
Since the middle of the last decade, many Poles have sought to take advantage of the difference in rates between Poland and Switzerland, and a benign exchange rate, to buy their homes.
Belka told Tok FM radio he would expect banks to offer lower rates to help borrowers swallow the higher installments caused by the stronger franc. He also warned them not to introduce extra insurance fees.
“What I had said earlier has now been strengthened by the franc’s sudden surge and (there is a) necessity for measures, that are, let’s say, extraordinary,” Belka said.
It was not immediately clear whether he meant measures the banks should take, or was weighing other policy tools.
“FX risks that those borrowers take solely today must sooner or later be distributed between the two (borrowers and banks),” Belka added.
Banking sources said on Monday bankers wanted to hear policymakers’ opinions before they took any decisions.
“One should not act too fast, but wait calmly to see the new Swiss franc’s equilibrium level, because this is a starting point,” Poland’s No. 1 bank PKO BP strategy director Pawel Borys told Reuters.
Poland’s largest opposition party has already said banks should convert mortgages at the exchange rate from before the franc’s sudden move, while the junior coalition partner PSL confirmed it sees a need to help people, without elaborating.
Central Bank’s board member Jacek Bartkiewicz has suggested banks should help those whose mortgage payments exceed 40 percent of their monthly salaries.
Both Poland’s regulator and the central bank insist the current level of franc does not pose a risk for Polish banks, which are already among the healthiest in Europe.
Central bank research shows the sector could faces problems when the exchange rate reaches 5.19 zlotys, because of the numbers unable to make their payments on loans taken at franc rates that vary from just above 3 to even around 2 zlotys. (Reporting by Wiktor Szary, Marcin Goclowski and Adrian Krajewski; Editing by Alison Williams)