Jan Cienski in Warsaw -

The Hungarian government's move to put an end to its long-running problems with loans denominated in foreign currency is shifting the forex spotlight to Poland, which now become the region's leading holder of the dubious financial products.

Ahead of the global economic crisis, Hungarians were the most enthusiastic adopters of loans not denominated in their local currency. The attraction was that borrowing in Swiss francs (and euro to a lesser extent) was much cheaper than high interest forint loans.

At their peak in 2009, forex loans - the vast majority mortgages - made up more than 70% of total Hungarian household debt, higher than almost anywhere else in Central Europe. The problems caused by the forint's subsequent plunge against the franc and the euro helped bring Prime Minister Viktor Orban to power in 2010 on a platform of attacking the mostly foreign-owned banks. 

Orban has hammered away at the banks over the last few years, but the issue is now being brought to a close as the government essentially forces the banks to convert hundreds of thousands of foreign currency loans to forints. With more than 90% of such loans likely to be switched in the first half of 2015, Poland will become the region's leading foreign currency loan holder overnight. 

Polish regulators were more wary of forex loans than their Hungarian counterparts, and kept them from spiralling to the same dimensions. At their peak in 2011, non-zloty loans, the vast majority in Swiss francs, came to 41% of household debt. That has now dropped to about 30%.

But with more than half a million Poles still holding foreign currency mortgages, the issue is starting to spill over into politics. The opposition Law and Justice party has made noises over the last year on the need to help those struggling to meet the hiked repayments. 

The Polish Peoples Party, junior partner in the ruling coalition, has expressed concern in recent days. Leader Janusz Piechocinski has suggested a "compensation programme" to help borrowers.

However, unlike in Hungary, where about a quarter of forex loans were in trouble, less than 3% are non-performing in Poland. The main reason for that is that the Polish loans are pegged to the Swiss National Bank's interest rate, which is currently zero; the Hungarian loans are not. At the same time, the bulk of the Polish forex loans were taken by wealthier urban residents, who have largely done well through the period of the economic crisis.

Unsurprisingly, the banks are keen to head off any political alarm. "These loans are being very well serviced," says Krzysztof Pietraszkiewicz, head of the Polish banking association. 

That suggests any Hungarian-style relief is unlikely in Poland.