- Any solution must avoid damage to local banks, aide says
- Loan conversion bill needs time, can't be rushed, Sokal says
Poland’s handling of $35 billion in Swiss-franc mortgages requires a “safe compromise” that avoids damage to local banks, according to President Andrzej Duda’s chief economic adviser.
The bill, which is currently being drafted in the president’s office, can’t be rushed and needs to take account of other levies currently being planned for the industry, said Zdzislaw Sokal, who’s also Duda’s representative to the nation’s body for financial oversight. Banks’ results for this year will be key for the final shape the bill takes, he said in an interview on Wednesday.
The president and his allies in the Law & Justice party are changing tack after making the plight of mortgage borrowers one of their signature issues during this year’s election campaign, promising to help those who’ve seen their monthly payments balloon after Switzerland let its currency appreciate. Since taking office, they’ve largely ditched plans to convert loans into zloty and force banks to pay most of the costs.
“The bill can’t ignore the security of the banking industry and Swiss-franc mortgage holders as well as an element of justice toward those who have their loans in zloty,” Sokal said. “These are the challenges and limitations, and they’re creating a situation where it’s not possible to draft this bill quickly. But they also guarantee that at the end of the day, we’re going to get a safe compromise.”
Many Poles took mortgages in Swiss francs and euros before the onset of the financial crisis to benefit from lower interest rates, ignoring the risk of currency appreciation. While such loans have largely been banned since, they still constitute 45 percent of all the outstanding home credit.
The bill has been put on the back burner as the government proceeds with plans to tax bank assets from next year to raise money for its key election promise of paying out 500 zloty ($126) monthly benefit per child. Finance Minister Pawel Szalamacha said this week that the eventual conversion costs for Swiss franc loans will be divided “not necessarily evenly, but in a way which won’t be biased against banks.”
The president will still submit the bill to parliament this month, although it will take effect from 2017 at the earliest, Fakt newspaper reported on Thursday, without saying where it got the information. Borrowers will need to get banks’ approval for the conversion and allowed to hand over their property to the bank and become debt free, according to the daily.