October 2, 2019 / 4:18 PM / 5 months ago

Polish central bank minimizes concerns about EU ruling on Swiss franc loans

FILE PHOTO: Poland's central bank governor-designate Adam Glapinski speaks during a hearing at a parliamentary panel at the Parliament in Warsaw, Poland May 20, 2016. Agencja Gazeta/Kuba Atys via REUTERS

WARSAW (Reuters) - Poland’s central bank governor, Adam Glapinski, on Wednesday played down concerns about an EU top court’s ruling on Swiss franc-denominated mortgages, saying he did not expect it to have a significant impact on central Europe’s largest economy.

“In the macro scale I do not expect any negative scenario,” Glapinski told a news conference.

“Please remember that this ruling will cover only a part of FX loans, not all banks that have different contracts. This will be a subject for Polish courts to assess,” Glapinski said.

On Thursday morning the European Court of Justice is to release its verdict regarding the validity of one Swiss franc-denominated mortgage granted in Poland by Raiffeisen Bank.

If the ruling favors consumers, it may trigger an avalanche of similar lawsuits against banks, with costs for lenders amounting over years to billions of euros.

Analysts have said such a ruling could pave the way for consumers to demand the conversion of their mortgages into the Polish currency zloty at the Swiss franc rate they were taken out at, which was much lower than today’s one. This would generate losses for banks.

At the same time these loans will carry a LIBOR-based interest rate, much more attractive than the Polish one, as the cost of money in Poland amounts to 1.5%.

It is expected that the ruling may weaken the zloty.

“From our point of view nothing worrying is happening to the exchange rate,” Glapinski said.

Reporting by Alicja Ptak; Writing by Marcin Goclowski; Editing by

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