Polish Central Banker Says Swiss-Loan Plan Won't Be `Disaster'

  • Glapinski may become central bank Governor as Belka term ends
  • PKO, Zachodni and MBank drop most on Warsaw's main stock index

Poland should resolve its foreign-currency mortgage burden quickly as it poses the biggest challenge for the country’s banking industry, the man poised to become Poland’s next central bank governor said.

“I can assure you” that a plan to deal with non-zloty mortgages “won’t be a disaster,” Adam Glapinski, who said he’s the president’s most probable pick for governor, said at a banking forum in Warsaw late on Tuesday. “Everyone involved in drafting the Swiss-franc loan plan has the stability of the industry in mind.”

The nation of 38 million is struggling to come up with a financially sound way to help Polish borrowers who took out home loans in foreign currencies, mostly in Swiss francs, and saw their monthly payments surge when Switzerland’s currency appreciated. President Andrzej Duda is reworking a bill to convert the loans into zloty after his initial proposal was called “pure evil” by current central bank head Marek Belka and the banking regulator KNF warned it could trigger bankruptcies and a financial meltdown.

KNF, whose Chairman Andrzej Jakubiak will be replaced in October, said in March that the banks may need to shoulder costs of between 44.6 billion zloty ($11.8 billion) and 67.2 billion zloty from the legislation, according to estimates using base-case exchange rates. The Poles have a total of $45 billion in foreign-currency mortgages.

The presentation of the final solution is “close and it will be done in dialog with the industry,” Glapinski said. As Polish lenders face other headwinds, including an already introduced tax on their assets and record-low interest rates, regulators “must help” the banking sector, which he described as stable. He added that all issues will be solved along with the banks.

Falling Shares

Glapinski’s comments come after the ruling party’s leader, Jaroslaw Kaczynski, told weekly WSieci that the central bank will “need to be involved” in the conversion plan. The president’s office is also seeking to engage some state financial institutions, including the central bank and BFG bankruptcy fund, in the plan, RMF radio reported on April 8, without saying where it got the information. Belka’s term ends in June and Duda appoints his successor.

“The government is determined to solve the Swiss-franc problem and find solutions for lenders to survive the costs of the conversion,” Michal Sobolewski, an analyst at BOS Bank SA, said by phone. “Investors might have presumed” the financial market regulator’s estimate “will be a red light.” However, looming changes at the central bank and the watchdog, coupled with signs that authorities are seeking tools to carry on with the plan, suggest “the idea won’t be shelved.”

Shares in Bank Zachodni WBK SA, PKO Bank Polski SA and MBank SA slumped from 2.3 percent to 2.7 percent on Wednesday, making the lenders with significant non-zloty home loans the biggest decliners on Warsaw’s WIG20 Index.

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