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Polish banks may face big hit from draft Swiss-franc loan plan -report
November 3, 2015 / 10:58 AM / 2 years ago

Polish banks may face big hit from draft Swiss-franc loan plan -report

WARSAW, Nov 3 (Reuters) - Poland’s president may propose a draft bill that would make banks bear the cost of converting Swiss franc-denominated mortgages at historical rates, Gazeta Wyborcza daily said on Tuesday, quoting an early outline of the plan.

The newspaper report said the authors of the plan estimated that such a proposal would cost the banks 1.2 billion zlotys($310.40 million) a year. Analysts have estimated it could cost banks substantially more.

More than half a million Poles took out home loans in Swiss francs, mostly between 2007 and 2008, hoping to benefit from low interest rates.

Since then, the franc has risen by more than 80 percent against the zloty, trapping owners in homes whose value is well below the zloty market price.

Last month, President Andrzej Duda said he was working on a draft proposal that would offer a “compromise” to banks and the mortgage holders. The latest plan, according to the Gazeta Wyborcza report, would put the full cost on to the banks.

The president’s office was not immediately available for comment.

“It is hard to imagine a solution that would be more costly. Roughly calculating the cost for banks would be around 50 billion zlotys ($12.93 billion). It would be very negative for banks’ valuations,” Kamil Stolarski, an analyst with Haitong IB, said.

Last year, Polish banks earned 16 billion zlotys.

Banks that have the biggest portfolios of Swiss franc-denominated mortgages were down on Tuesday by as much as 3.7 percent, while the main index was down 0.56 percent.

The banks, which include PKO, BZ WBK, mBank, Millennium, and BPH, Getin hold Swiss franc portfolios worth some 144 billion zlotys, or 8 percent of Poland’s gross domestic product.

Poland’s parliament had initially debated a proposal that would have divided the conversion costs equally between the banks and their clients, but this was unexpectedly amended so that 90 percent of costs fell on the banks.

This proposal was then rejected by the upper house of parliament. At this point, the Swiss-franc mortgages issue was effectively put on hold ahead of Poland’s parliamentary elections last month, where the Law and Justice party won an outright majority. ($1 = 3.8678 zlotys) (Reporting by Marcin Goclowski; Additional reporting by Pawel Sobczak. Editing by Jane Merriman)

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