Polish banks not set to discover cost of forex loans conversion until March

By bne IntelliNews February 2, 2016

The Polish bank sector will have to wait until an unspecified date in March before an estimate of the cost of the government’s planned law to allow forex loans to be converted will be ready, financial watchdog KNF said on February 2. Meanwhile, Fitch Ratings increased the uncertainty over the sector by suggesting it could change its ratings on the county's major lenders.

A tax on assets of financial institutions entered into force on February 1, which will join the proposed forex loans conversion in putting question marks over performance in the bank sector. The draft bill offers little clarity on the costs or timing of implementation. That suggests M&A will remain stuck and banking stocks will trade largely sideways at relatively low pricing while the market awaits details.

“The presentation of calculations is planned for March," a KNF spokeman told PAP, without offering further guidance. He noted the issue is of “systemic importance.”

Reflecting the deep level of uncertainty, and various claims, yet another warning was signalled by the rating agencies on February 2. Warsaw has already been warned by the National Bank of Poland and the European Central Bank that imposing too big a financial burden on lenders could be detrimental to the entire economy.

Fitch Ratings said in a report that it could review its ratings of the most vulnerable lenders. “Poland's new bank tax and proposal to help customers with foreign-currency mortgages will weaken the standalone credit profiles of Polish banks,” the agency writes. Getin, Bank Millennium, mBank and Eurobank are most exposed to the negative effects of the conversion, it states.


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