Crucial EU-Court Ruling on Polish Legacy Loans Set for June

The European Union’s top court will rule next month in a much-anticipated case over Swiss-franc mortgages that threatens to increase legacy lending costs for Polish banks.

(Bloomberg) — The European Union’s top court will rule next month in a much-anticipated case over Swiss-franc mortgages that threatens to increase legacy lending costs for Polish banks.

The decision on whether the banks can pass on extra fees to customers whose foreign-currency loans were deemed unfair will be announced on June 15, Arkadiusz Szczesniak, the head of the Stop Banking Lawlessness lobby told Bloomberg, citing a letter his legal team received from the court on Friday. 

The set date “may come as a surprise as the verdict was expected closer to the autumn,” according to analysts at MBank SA. Warsaw’s WIG-Bank index climbed 0.6% early on Monday, while the benchmark WIG20 gauge was up 0.2%.

Piling Costs

The EU Court of Justice has yet to announce the date of the ruling on its website. Szczesniak’s lobby represents some of the people, who sued their banks over foreign-currency lending practices. 

In a non-binding opinion in the case, announced in February, an adviser to the court sided with the borrowers, saying banks can’t claim payments beyond reimbursements of the loan principal in cases where contested mortgage deals were voided by courts. 

If the final ruling follows the same approach, it could lead to additional costs for the industry, whose earnings have suffered from mounting lawsuits. An aide to Prime Minister Mateusz Morawiecki said last month Poland should consider a blanket conversion of all Swiss-franc mortgages into zloty as part of its contingency plan for the long-running row.

The date announcement, coupled with a potential extension of loan moratoriums, is “likely to make investors more cautious” over the country’s banking stocks in the coming weeks, while volatility may increase, according to Lukasz Janczak, an analyst at Erste Group Bank SA.

–With assistance from Piotr Bujnicki.

(Updates with analyst comment from the fourth paragraph)

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.