New Polish Regulator Backs Plan to Cut Costs of Foreign-Loan Fix

  • Chrzanowski says Polish banks only weakness is non-zloty loans
  • Costs of draft law to drop to 4 billion zloty if changes made

Poland’s new chief financial regulator backed central bank plans to reduce the cost of legislation forcing lenders to return to clients some fees on their foreign-currency loans.

Marek Chrzanowski, picked to run the Financial Supervision Authority last week, said that if tweaks to the legislation suggested by the National Bank of Poland were implemented, the law would cost commercial lenders about 4 billion zloty ($1.02 billion). A day before he took office, the watchdog said in an estimate for lawmakers that the bill, in its present shape, would cost 9.3 billion zloty, triggering a sell-off in Polish lenders.

Authorities have struggled for more than a year to find ways to help the 565,000 Poles who took out foreign-currency loans, mostly in Swiss francs, without destabilizing the banking industry. The latest legislation, put forward by President Andrzej Duda, envisages banks compensating customers for “excessive” spreads on currency transactions. Lawmakers will begin deliberating on the bill on Wednesday.

“I am counting on the bill evolving during parliamentary works, in line with modifications suggested by the central bank, so the risk for financial stability is reduced,” Chrzanowski told reporters in Warsaw. “We want to avoid any imbalances and volatility that could destabilize the banking system.”

‘Only Weakness’

The legislation is the result of a compromise between Duda and central bank Governor Adam Glapinski, who agreed in August that the safest way to unwind banks’ $36 billion foreign-currency mortgage portfolios was for the regulator to create incentives for lenders to reduce their exposure.

The pick of Chrzanowski, 35, a former assistant to Glapinski, signaled that he’ll work closely with the central bank to resolve the issue. He said the “only weakness” of Polish banks was their exposure to foreign-currency home loans.

An index of Warsaw-listed banks dropped as much as 14 percent in January amid concern the ruling Law & Justice party would impose a more costly solution to the Swiss-loan issue. Banks rebounded in August on the compromise and are trading 2.9 percent lower year to date, comparing with a 7.5 percent drop in the WIG20 gauge.

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