Faulty credit agreements in Swiss francs – Polish banks face billions in costs

Faulty credit agreements in Swiss francs – Polish banks face billions in costs

PKO Bank Polski

Polish banks could face costs of around 20 billion euros.

(Photo: Reuters)

Frankfurt The banks in Poland are threatened with high costs if the European Court of Justice (ECJ) decides against the institutes in the case of the Swiss franc loans. “Such a decision would mean one-off costs of 100 billion zlotys (around 20 billion euros) for the banking sector,” said Jacek Jastrzebski, head of the Polish financial regulator KNF, on Tuesday.

The KNF is examining before the ECJ whether the banks may benefit from lending in Swiss francs if the customer contracts were incorrect. The KNF estimate of 20 billion euros is based on 14 banks, which together hold 98 percent of the loan portfolio in foreign currencies, explained Jastrzebski.

Hundreds of thousands of Polish borrowers took out mortgages in foreign currencies, mainly Swiss francs, many years ago to take advantage of lower interest rates. However, the Swiss franc gained in value compared to the zloty, and costs for customers rose.

Thousands of Poles sued to get out of expensive loans and in some cases reached an out-of-court settlement with their lenders. But according to Jastrzebski, the parties should have used the window of opportunity better, because out of around 100,000 court cases, there was only an agreement in 34,000.

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