Polish central banker Lukasz Hardt said taxing foreign currency bank assets at a higher rate than zloty assets may encourage lenders to get rid of Swiss franc-denominated mortgages, which are weighing on the country's financial system. More than half a million Poles took out Swiss franc loans to benefit from Switzerland's low interest rates but now face huge repayment costs because the franc has doubled in value against the zloty in the last few years.
The central bank governor and president's office announced a plan in August to encourage banks to convert clients' foreign currency mortgages into zlotys but parliament has yet to take action on the plan. Earlier this year the ruling Law and Justice party introduced a bank tax to finance its broad social benefit scheme, as it had promised to do before coming to power in 2015. Hardt, a presidential nominee, told Reuters in an interview it was worth considering how the tax could be used to achieve goals including financial sector stability.
"It is worth considering differentiating (the tax), I mean by taxing assets in foreign currencies at a higher rate, for example Swiss franc-denominated credits," Hardt told Reuters in an interview.
"This would be a mechanism that would encourage banks to get rid of these assets ... while those in Polish zloty would be taxed at a lower rate." While he has no formal say in banking sector legislation, his comment may be seen as testing how the public and banks would react to such an idea. The banks with the largest volume of Swiss-franc loans on their books include the local units of Santander, Commerzbank, Millennium and Raiffeisen.
Last week Poland agreed to buy back Poland's second-largest bank Pekao SA from its Italian owner UniCredit , which has a modest Swiss franc-loan portfolio. Poland's biggest lender, state-run PKO BP, holds a large forex-loan portfolio. Hardt said he saw no real chance of interest rate moves in 2017 but stressed that there may be a need to hike them once inflation hits 1.5 percent, the lower band of the central bank's monetary policy council target. After more than two years in deflation, Polish consumer prices were flat year-on-year in November.