Polish banks unveil relief package for CHF mortgage holders

About 550,000 Poles currently hold Swiss franc-denominated mortgages, about 40 percent of all mortgage lending in the country.

The majority of the loans were taken out before the 2008 global financial crisis and were widely seen at the time as being lower risk than złoty-denominated loans, benefiting from low Swiss interest rates.

Adopting a plan earlier proposed by outgoing president Bronisław Komorowski, the ZBP scheme is to partially cover the costs of higher monthly mortgage payments for those that have lost jobs or are physically incapacitated.

Furthermore, it suggests, the lowest earners should also be subsidised if the CHF exchange rate goes above PLN 5, but only up to a maximum of PLN 0.33 per unit.

ZBP chief Krzysztof Pietraszkiewicz criticised a plan floated by president-elect Andrzej Duda during his recent presidential election campaign for the state to cover all costs of franc appreciation from the date when each mortgage holder took his or her credit in the Swiss currency. Pietraszkiewicz said the move would cost the taxpayer PLN 30 billion.

The franc has appreciated strongly since the Swiss national bank took the decision to lift restrictions on its upward movements in January.

Several million Poles have taken out mortgages in the currency in the last decade and many are now in negative equity, a situation in which the value of their debt is higher than that of their property.

Marek Belka, head of Poland’s central bank, said on Tuesday that Polish banks should convert Swiss-franc mortgages into złotys by withholding dividends.

“Banks need to know that the pressure for conversion will be there all the time and will increase, so they should prepare themselves capital-wise, not pay out dividends and cover the costs,” Belka told broadcaster TVN24.

Belka added that Duda’s idea was possible but would be “immensely costly” for the taxpayer. “If we were to convert the Swiss-franc mortgages at a historical rate, then among the banks who would find themselves in trouble would be those which do not have foreign parents, and then we would have to contribute ourselves.” (jh/jb)