| WARSAW, June 12
WARSAW, June 12 Poland's latest attempt to get
banks to restructure their problematic foreign-currency mortgage
portfolios could mean they have to set aside an additional $3.2
billion but would not restrict lending, ratings agency Moody's
predicted on Monday.
The Financial Stability Committee (KSF) recommended a new
rule on June 2 which raises the risk weight on Polish banks'
exposure to foreign exchange mortgages used for calculating
their capital adequacy to 150 percent from 100 percent.
About half a million Poles took out Swiss franc loans before
the global financial crisis to benefit from a strong zloty and
low interest rates in Switzerland and Polish foreign currency
mortgages, mainly in Swiss francs, total 153 billion zlotys ($41
billion), or about 8 percent of gross domestic product (GDP).
"We estimate that the financial effect of the risk-weight
increase on the entire banking sector will be up to 12 billion
zlotys," Moody's said, adding that the impact would be spread
over time and would not curtail their lending.
The KSF recommendation, accompanied by eight others, is
likely to be introduced and will raise the cost to the banks of
holding home loans denominated in foreign currencies. The Polish
bank stock index is down by 1.6 percent since then.
The loans became a hot political issue before the 2015
elections following a spike in the value of the Swiss franc in
early 2015, which increased monthly instalments and the value of
the FX mortgages for thousands of Polish families.
"These measures replace the previously contemplated
mandatory conversion of banks' foreign-currency mortgages into
Polish zloty, which ... had the potential to severely affect
some banks' capitalisation," it added.
Before the 2015 elections, politicians in the ruling Law and
Justice (PiS) party had called for a conversion of FX mortgages
into zlotys at the exchange rates they were taken out at and
that banks should bear the cost.
PiS backed down, however, after estimates from the financial
regulator and the central bank showed such a move would likely
destabilise the whole financial system.
Because of the rise in value of the Swiss franc over the
last few years, many Poles still face an outstanding debt larger
than the value of the real estate it was taken out to finance,
despite years of paying back instalments on the loan.
In February, PiS head Jaroslaw Kaczynski said that Polish
borrowers seeking compensation should not expect the government
to impose a settlement on the banks, but take their individual
claims to court instead.
The rise in mortgage servicing costs on Swiss franc
mortgages expressed in zlotys has been softened by a further
fall in interest rates in Switzerland in recent years.
($1 = 3.7307 zlotys)
(Editing by Alexander Smith)