Poland says banks could spread FX loan bill losses over time
Jan 18 Polish banks may be able to spread losses linked to looming Swiss franc mortgage conversions over time, the finance ministry said on Monday, after a draft FX loan bill sent the shares of Warsaw-listed lenders to multi-year lows.
President Andrzej Duda laid out a draft law on Friday to saddle lenders with the costs of converting Swiss franc loans into zlotys, which according to analysts could cost banks up to 25 billion zlotys ($6.1 bln) in total.
Banks also face a new bank tax, which Duda signed into law also on Friday and is seen raising 4 billion-5 billion zlotys for this year’s state budget. Analysts say the two measures combined could undermine one of Europe’s healthiest banking sectors, analysts say.
Duda is backed by the ruling Law and Justice (PiS) party, which formed the government after winning last October’s election.
“In the Finance Ministry’s opinion, it seems possible for banks to book the potential loss over time,” the ministry said in a statement, adding that it deemed the proposed bill to be “fair”. It did not specify a time frame.
“Moreover, the ministry points out that the proposed mechanism allows for a partial reversal of provisions linked to LTV (loan-to-value), as well as curbing additional capital requirements (…), which has a measurable, positive impact on the sector’s profit.”
Poland’s largest banks PKO BP, Pekao, BZ WBK and mBank led declines among Warsaw-listed blue-chip shares on Monday, falling by up to 7 percent.
Losses could be higher, analysts said, but were capped by rising market expectations the mortgage plan will have to be watered down to make it feasible for the sector, which closed 2014 with a joint net profit of over 16 billion zlotys. ($1 = 4.0943 zlotys)
Source: REUTERS – Poland says banks could spread FX loan bill losses over time
