bne IntelliNews -

The Polish Senate has reworked the controversial bill on conversion of foreign currency loans, reducing the cost of conversion for the banks. However, the final shape of the conversion solution will most likely be clear only after elections in October.

Under the Senate amendments passed on September 4, borrowers will still be able to convert Swiss franc mortgages into zloty at market rates. The resulting PLN debt will be compared with the burden on the borrower had the original loan been made in the local currency, but In line with the original bill’s provisions, lenders will only be forced to take 50% of the resulting losses, far milder than the 90% proposed by the lower house in early August on the initiative of leftist opposition SLD. 

The ruling Civic Platform (PO) have since said it will work toward restoring the original proposal of how the loss should be split. The bill will now return to the lower house for final vote, where the 50% rule is likely to stand, but the bill's further fate is less clear.

There is the question of whether President Andrzej Duda, who hails from PO’s main rival, Law and Justice (PiS), will sign a PO-driven proposal ahead of the October general elections. PiS favours FX loans conversion at historical rates, which would cost banks an estimated PLN30bn. 

“It is pointless to examine details of proposals made by PO, PiS or regulators at this time – none is likely to be implemented in this form. Even if a version of the law is passed, it will be reviewed/expanded after the elections, and probably in several stages,” Commerzbank wrote.

The election campaign is already in full swing, with PO lagging well behind the populist PiS. At stake there are votes from 500,000 holders of CHF-denominated mortgages, whose repayments increased dramatically early in 2015 when the Swiss franc surged in value.