Polish watchdog warns against CHF loans conversion bill as it estimates cost at PLN67bn

By bne IntelliNews March 15, 2016

KNF estimates the likely cost of the presidential bill on conversion of Swiss franc-denominated mortgages at PLN67bn (€15.6bn), the Polish financial market regulator said in a report on March 15.

The figure is based on the "most likely scenario" for the scheme. KNF warns that such as cost would threaten the stability of some lenders, and lead to a “loss of trust in the banking system". However, officials have already suggested that the draft bill will be redrawn.

“In an extreme case, [the conversion] could cause a financial crisis,” KNF warned. The watchdog was charged with providing an estimate in January, as the president's office unveiled a set of undetailed proposals included in the draft.

The report is likely to push Polish President Andrzej Duda to officially drop the current proposal, according to which borrowers would be allowed to make further payments on their loan at a “just exchange rate,” reached by a comparison of the cost of the forex loan compared with a zloty-denominated loan.

Before KNF’s released its estimate, a number of other estimates suggested the cost of conversion at tens of billions of zloty. That has seen numerous officals, including the presidential office, suggest changes are possible. The chancellery of the president said on March 15 that it is reviewing the KNF assessment.

“The chancellery considers KNF’s calculations as basis for further discussion about the final shape of the [conversion scheme]. For the chancellery, the priority is helping the borrowers while retaining the state’s and the banking sector’s financial stability,” it said in a statement.



Related Articles

Azerbaijan's IBA sees assets fall 29% y/y in 2017 after debt restructuring

The assets of the International Bank of Azerbaijan (IBA), the largest lender in the country, contracted by 28.9% y/y to AZN8.7bn ($5.1bn) in 2017, the state-controlled bank reported on January 10. ... ... more

IMF sees economic recovery in Iranian non-oil sectors but urges shoring up of banking system

Iran’s economy is starting to recover more rapidly from years of international sanctions but the country urgently needs to shore up its banks, a senior International Monetary Fund official told ... more

Kazakhstan’s Bank of Astana SPO to be first ever placement of foreign bank on Moscow Stock Exchange

Kazakhstan’s Bank of Astana (Astana Banki) plans to conduct a secondary offering of shares (SPO) on the Moscow Stock Exchange, RNS news agency reported last week. Bidding will begin on December 14. ... more