Banks should bear more than half the costs of converting Swiss franc-denominated mortgages into zlotys at historical rates, Polish President Andrzej Duda's office said on Friday. More than half a million Poles took out home loans in Swiss francs, mostly between 2007 and 2008, hoping to benefit from low interest rates. Since then, the franc has risen by about 80 percent against the zloty, trapping owners in debt out of proportion to Polish property values.
Duda believes it would be equitable for banks to bear between 50 and 90 percent of the conversion costs, his secretary of state Maciej Lopinski told a news conference, adding that the president's office had not yet reached an agreement with the Swiss franc borrowers on the shape of a draft law on the issue. Lopinski added that the new loan conversion law must not disadvantage those who had taken out loans in zlotys and had paid higher interest rates over the years. Earlier Lopinski told Reuters that mortgages and consumer loans would be eligible for conversion, but that the process would not be available to people who had purchased several flats for investment purposes. "Our intent is to find such a solution which will allow paying back of the loan at the exchange rate (at which) the loan was extended," Lopinski said.
Poland's bank shares have fallen by about 20 percent since Duda was elected in May amid expectations of a loan conversion law and also the introduction of a new bank tax. Last month, Poland's conservative but economically populist Law and Justice party (PiS), which backed Duda for the presidency and has argued strongly for the bank tax, won a parliamentary election, further adding to investors' concerns.
Lopinski tried to dispel concerns that the costs involved in both the loan conversions and the bank tax could harm Polish banks. "The president cares for the security of the state, including financial security," he said. Lopinski said work on the loan conversion draft law would continue for "some more time", adding there were still significant differences between the president's office and Swiss franc borrowers' lobbies on some issues. "We have not reached agreement so far. The proposal of the Swiss franc borrowers was unacceptable for us due to concerns about its being in line with the constitution," he said.