Polish Senate Opts for Equal Swiss-Franc Loans Conversion Split

The Polish Senate’s finance committee recommended splitting the cost of Swiss-frank loan conversions equally between banks and borrowers to overturn a deal aimed at sticking lenders with most of the bill.

The move follows a vote in Poland’s lower house, the Sejm, to shift 90 percent of the cost of converting household Swiss-franc loans onto banks instead of borrowers. The bid to return to a 50-50 split will face a vote in the Senate next week. The Sejm will also have to vote again, with the ruling Civic Platform pushing for the equal split even as its junior coalition partner wants lenders take the brunt of the cost.

“Such a solution won’t threaten the stability of the banking industry, it will just limit lenders’ dividend payouts,” Wojciech Kwasniak, deputy chairman of the country’s financial market regulator, said at the commission’s meeting late Thursday.

Swiss-franc loans have become a major political battleground ahead of October general elections. With political parties trying to woo voters by providing relief for franc borrowers, banks will have to pay. The original draft law estimated a cost to lenders of 9.5 billion zloty ($2.53 billion), compared with 21 billion zloty in the 90-10 split scenario, according to the Financial Stability Committee.

Banks Protest

The legislation has drawn protests from the international owners of Polish banks, including General Electric Co., Raiffeisen Bank International AG, Commerzbank AG and Banco Comercial Portugues SA. GE threatened to seek damages against the government if the bill is passed. Commerzbank said it could take legal action, while Raiffeisen wrote to the government warning the proposal may violate an Austrian-Polish investment pact.

The junior coalition Polish Peasants Party, which supported the Aug. 6 amendment to raise banks’ share of the cost, will decide on how to vote on the conversion bill before the lower chamber meets on Sept. 9, Genowefa Tokarska, a lawmaker for the party, told Bloomberg on Friday.

PKO Bank Polski SA, Poland’s largest bank, rose 0.5 percent to the highest in a week at 9:41 a.m. Commerzbank’s MBank SA added 0.5 percent, while BCP’s Bank Millennium SA rose 1.5 percent.

Senators also agreed on Thursday that loan conversions should be spread over time, depending on the proportion of the loan to the value of the underlying property. They also kept a plan to limit aid to borrowers with apartments of less than 100 square meters and houses of less than 150 square meters.

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