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Polish finance minister cool on regulator's Swiss franc plan
February 5, 2015 / 3:18 PM / 3 years ago

Polish finance minister cool on regulator's Swiss franc plan

WARSAW, Feb 5 (Reuters) - Polish Finance Minister Mateusz Szczurek distanced himself on Thursday from the regulator’s idea of helping Swiss franc-denominated mortgage holders, saying it could pose a risk to the banking sector.

The plan of Andrzej Jakubiak, head of regulator KNF, is aimed at helping people struggling with repayments after a surge in the value of the Swiss currency.

It assumes they would be allowed to convert their mortgages into zlotys at a historical exchange rate, although clients would have to pay banks compensation.

Jakubiak has estimated the cost of the plan at 1.2 billion zlotys ($329 million) per year. According to analysts, this would add up to around 20 billion in 15-16 years time, as a number of the mortgages have such a maturity.

“When it comes to chairman Jakubiak’s proposition, I’ve already drawn several issues that need to be dealt with ... before one can talk about such propositions,” Szczurek told a news conference.

“Among them is the issue of accrual recognition of losses to be incurred over the next 20 years. This is very difficult to achieve, and auditors won’t accept it, and this means an accumulation of very large losses in one year, which could be dangerous,” Szczurek said.

Jakubiak said on Tuesday he was still working on his plan. On Friday he starts consultations with banks.

Home buyers across central and eastern Europe took out loans denominated in Swiss francs in the early 2000s, attracted by interest rates in low single digit percentages compared with double-digit rates on mortgages in their local currencies.

Repayments soared last month after the Swiss central bank removed its cap on the franc. The currency jumped some 20 percent against the Polish zloty to around 4.2 zlotys. It has now stabilized at 3.95 zlotys.

The Polish government has pressed hard on banks to cut interest rates following the Swiss decision, and to reduce the price for francs they sell their clients to partially offset the soaring costs of servicing mortgages.

As Poland faces presidential and general elections this year, the Swiss franc issue has become an political one and every major party has its own suggested solution.

The deputy prime minister ruled out last week, however, that Poland would go the way of Hungary and force lenders to convert mortgages into the local currency.

$1 = 3.6482 zlotys Reporting by Marcin Goclowski; Editing by Mark Potter

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