Banks agree to help franc mortgage holders

“Not a single bank which participated in the meeting today is going to be limited to a LIBOR base rate equal to zero. All banks will take into account a negative LIBOR rate, in negative territory,” Finance Minister Mateusz Szczurek told broadcaster TVN following Tuesday's meeting of Poland's Financial Stability Committee (KSF).

The Committee is made up of members from the finance ministry, Marek Belka, head of the National Bank of Poland (NBH) as well as representatives of the country's banking community.

“It would be a gross violation of the symmetry of the risks if there was a situation where banks cannot incur a loss. Neither the government, nor the KSF can accept this, because market risk affects everyone,” Szczurek explained.

Contract violations?

In a separate interview with the broadcaster Marek Belka reiterated that fixing the exchange rates to those seen early last week – before the Swiss National Bank decided to remove a cap of the franc against the euro – would be a violation of banking contracts.

Opposition leaders have called upon the government to intervene with banks so that the half-million families who hold mortgages in Swiss francs could pay their next installments at historic exchange rates.

“At the [KSF] meeting today, banks made a unanimous decision that they will apply the current, negative interest rate of the Swiss franc,” Belka said.

The head of the Polish Bankers' Union, Krzysztof Pietraszkiewicz, told Polish Radio that banks are currently working on a number of solutions to help mortgage holders pay off their installments.

The current monthly payment on many foreign-currency mortgages has increased significantly over levels seen in 2008, when the franc cost around PLN 2. Now experts say the currency is likely to stabilise closer to PLN 5 levels. (rg)