Polish Banks Rebound on Report Swiss-Franc Bill May Be Delayed

  • Law & Justice will focus on tax levy, Puls Biznesu reports
  • Banks rise, lifting WIG20 stock gauge from 6-year low

Polish bank stocks rose on Thursday, helping the benchmark equity gauge climb from a six-year low, after a local newspaper reported the government won’t prioritize legislation that burdens lenders with the cost of converting Swiss-franc loans to zloty.

PKO Bank Polski SA, Poland’s largest lender, surged 3.6 percent, while Getin Noble Bank SA jumped as much as 14 percent. The rally lifted Warsaw’s WIG20 index 1.6 percent and trimmed its three-month decline to 18 percent, still the third-steepest retreat among equity markets globally.

Banks were among the hardest-hit Warsaw stocks after the Law & Justice party, which swept to power in a general election in October, proposed taxing the industry and toughened the previous government’s plans for banks to shoulder the cost of the mortgage-loan conversion. That concern eased on Thursday after the Puls Biznesu newspaper said the law on the loans may only be introduced in 2017,  citing unidentified people close to the Finance Ministry and the President’s office.

“News has been negative for banks recently and this is information that’s evidently positive,” Piotr Palenik, an analyst at ING Securities SA brokerage in Warsaw, said by phone on Thursday. “Banks with the most exposure to the loans such as Getin Noble, MBank and Millennium are the biggest gainers.”

Poland has $35 billion in home loans denominated in Swiss francs. The mortgages were popular in the past for their low interest rates, but became a bigger burden for homeowners when the franc surged after Switzerland’s January decision to remove a three-year limit on its gains. The zloty traded at 4.0057 per franc at 11:38 a.m. on Thursday, more than double a record low in 2008.

Representatives of bank clients with foreign-exchange loans met President Andrzej Duda last week. Both sides want a “quick finalization” of the bill, “yet they agree that excessive pressure on the pace of work could have a negative impact on the quality of the measures,” according to a statement drafted together by the president’s office and the mortgage holders.

The cost of the conversion was estimated at as much as 35 billion zloty before tax by Haitong Bank SA, more than the banking industry’s total earnings in the past two years.

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