Poland is unlikely to pass laws helping banks resolve a legacy Swiss-franc mortgage debacle before a parliamentary election in the fall, setting lenders up for more losses.
(Bloomberg) — Poland is unlikely to pass laws helping banks resolve a legacy Swiss-franc mortgage debacle before a parliamentary election in the fall, setting lenders up for more losses.
Jacek Jastrzebski, the head of the regulator, told bank executives at a meeting on Monday that he doesn’t believe the legislation his team is working on would find support among lawmakers, according to a person familiar with the discussion, who asked not to be named because the talks are private.
The regulator has warned that lenders’ provisions may more than double for legal risks over the loans, issued mainly in the run-up to the 2008 global credit crisis, before the Swiss currency surged.
A ruling from the European Union’s top court next month could spark fresh lawsuits from franc mortgage borrowers and additional provisions.
The lack of support from the government reduces the likelihood of Poland following Hungary, Romania and Croatia into converting the legacy loans into local currency. Pawel Borys, an aid to Prime Minister Mateusz Morawiecki, last month said that the country should consider a blanket conversion as part of its contingency plan for the verdict.
The regulator has warned that lenders’ provisions for legal risk may surge to as much as 100 billion zloty ($24 billion), from about 40 billion zloty already booked, if the court rules on June 15 that they aren’t allowed to charge interest on the foreign-currency loans that were deemed unfair.
The watchdog’s spokesman, Jacek Barszczewski, declined to comment on the content of the meeting, which was first reported by Business Insider Polska on Thursday. The regulator has repeatedly and publicly communicated to banks that they shouldn’t count on the legislation and seek settlements with clients instead, Barszczewski told Bloomberg News.
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.
The regulator has ordered banks, whose earnings have suffered from mounting lawsuits, to halt dividends until the impact from the final verdict is known.
Asked about the meeting during a conference call on Thursday, ING Bank Slaski SA Chief Executive Officer Brunon Bartkiewicz told reporters that the regulator told commercial banks that there’s no chance to adopt Swiss loan legislation before the EU ruling.
“The verdict may show that the industry’s current provisions may be not sufficient,” he said. “Such a mismatch may become a heavy hit.”
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