Banks ‘against legislation” as fix for Swiss franc loans

You cannot interfere with civil contracts because you break all kinds of other provisions” Tadeusz Białek, the Chief Counsel of the Polish Bank Association told PolandIN, discussing the options at hand in dealing with the Swiss franc loan situation.

Big losses for banks if Court guidelines unfavourable

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A ruling by the European Court of Justice in early October - in a case referred by a Warsaw court concerning a suit taken out by a family against a major lender - is seen by many as opening an avenue for more positive verdicts from Polish courts, regarding allegedly unfair mortgage contracts in Swiss francs.

Around 600,000 foreign currency loans were taken out since the beginning of the millennium up to the financial crisis of 2008. The majority were contracted right at the peak of the zloty value, when the CHF/PLN exchange rate soared to 2:1 before crashing to around four. Many franc borrowers now have negative equity in their homes, owing more than their property is worth, even after making more than 10 years of repayments.

Efforts to legislate the conversion of the loans to Polish currency have not been successful, hinging on the potential losses that could be incurred by banks, which the association estimated as being close to EUR 14 bn a few months ago, a figure it is now revising.

Mr Białek said that one of the difficulties in legislating the fixing of such a situation is the risk of breaking “other provisions”. As many of the lending institutions involved at that time were foreign-owned banks, “they have rights arising from bilateral agreements.”

The issue was a key issue before the elections in 2015, when the franc went as high as PLN five, causing hardship for borrowers, whose repayments shot up. The

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