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UPDATE 2-Polish regulator tells five lenders to set aside more capital
October 24, 2015 / 2:18 PM / 2 years ago

UPDATE 2-Polish regulator tells five lenders to set aside more capital

(Adds Getin Noble Bank)

WARSAW, Oct 24 (Reuters) - Poland’s financial regulator has recommended that five banks, including the country’s largest, PKO BP, set aside more capital to help them cope with their large Swiss-franc loan portfolios, the banks said.

About 550,000 Poles hold mortgages denominated in Swiss francs, mostly taken out before the financial crisis when the zloty was stronger against the franc. They were hit by a surge in the franc after Switzerland in January scrapped its policy of capping the currency against the euro.

Some Polish borrowers have struggled to make repayments on their mortgages.

The five banks told to plump up their capital cushions were No.1 Polish lender PKO BP, BZ WBK, mBank , BGZ BNP Paribas and Getin Noble Bank .

The regulator, KNF, recommended that PKO BP set aside 12.76 percent of its total capital, or an extra 0.76 percentage point, the bank said in a statement late on Friday.

BZ WBK, a unit of Spain’s Santander , was told to maintain 12.72 percent of its capital, or an extra 0.72 percentage point, it said in a separate statement.

For mBank, a unit of Germany’s Commerzbank, the recommendation was to maintain funds to cover an additional 4.39 percentage points or 16.39 percent of its total capital, it said on Saturday. It already had more capital than that set aside, it said.

For BGZ BNP Paribas, the local unit of the French lender, KNF recommended maintaining 12.71 percent of its capital, an extra 0.71 percentage point, the bank said in a statement. It had met this requirement prior to receiving the recommendation, it said.

Getin Noble Bank, Poland’s sixth-biggest lender, was told to set aside 14.03 percent of its total capital, up 2.03 percentage points, it said in a statement.

The regulator has also asked the bank to draw up and present to it a plan for achieving the required capital ratio by no later than the end of next June, Getin said.

None of the banks gave figures in zloty for how much more they had been asked to set aside.

All five were told to hold the extra funds to hedge the risk stemming from their foreign currency-denominated mortgage portfolios. At least three-quarters of the extra funds need to be composed of tier 1 capital, the regulator told the banks.

PKO, BZ WBK and mBank were also told to retain at least half of the profits they generated last year.

Earlier this year, all five lenders opted not to pay out dividends from their 2014 profits.

The regulator also recommended that from next January all banks keep their tier 1 capital ratio at 10.25 percent and their total capital ratio at 13.25 percent, PKO said.

Other banks with large portfolios of Swiss franc mortgages include BPH, Millennium and Raiffeisen’s Polish unit. (Reporting by Wiktor Szary; Editing by Hugh Lawson)

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