WARSAW--Poland's finance minister ruled out providing debt
relief to more than half a million borrowers by allowing Swiss
franc loans to be converted into the local currency at lower
exchange rates, saying such a move could undermine the financial
sector's stability.
"It isn't the role of the government to be removing all possible
risks people face, such as the risk of foreign-exchange
fluctuations or changes to property values," Mateusz Szczurek said
on Wednesday.
His comments, which boosted shares in Polish banks, contrast
with those made by the Poland's financial regulator last week. The
Financial Supervision Authority had suggested that borrowers
struggling with higher debt and monthly payments might be permitted
to convert their loans at the rate they received them, provided
they pay banks the difference in payments over the years in
comparison with zloty loans, which had a higher interest rate.
Comments from Prime Minister Ewa Kopacz earlier this week also
had indicated the Polish government was ready to consider exposing
banks to some losses on foreign-currency loans.
Poland's economy ministry, however, did propose some steps on
Wednesday to ease the burden on borrowers with Swiss franc loans,
including converting them to zlotys at the current exchange
rate--which is much higher than before the Swiss National Bank
abruptly scrapped its policy of curbing the value of the country's
currency against the euro.
Mr. Szczurek said a conversion using historical exchange rates
would undermine the stability of the banking sector in Poland.
"As to mechanisms that would enforce loan restructuring, they
are dangerous for borrowers. If the zloty firms to the franc, which
may and will likely happen, it would be detrimental for clients.
All such decisions must not undermine the stability of the
financial sector."
Polish bank stocks soared on the news. Poland's top bank by
assets, state-controlled PKO Bank Polski SA was 5% higher in late
afternoon local time, Commerzbank AG's mBank SA was 4.7% higher,
while small lender Getin Noble Bank SA, with a relatively high
portfolio of Swiss franc loans, was 9.3% higher.
The SNB's decision to no longer curb the franc's strength on
Jan. 15 briefly sent the zloty to 5.19 against the Swiss currency,
shocking borrowers in Poland as well as Austria, Hungary and
Romania, where franc loans used to be popular because of lower
interest rates compared with most currencies.
The zloty has recovered partially since, trading at 4.13 zlotys
to the franc on Wednesday afternoon. While the exchange rate seems
more manageable, it is well above levels of around 2 zlotys in
2006-2008 and may still cause pain to overleveraged borrowers,
increasing nonperforming loans in Poland.
To help them, Polish banks will account for negative London
interbank offered rates, which will mean lower monthly payments for
borrowers, said Economy Minister Janusz Piechocinski.
Borrowers will also have the option of converting loans at the
central bank's official current exchange rate without fees, as well
as a three-year freeze on capital payments. The government will
also ask banks not to seek additional collateral, or guarantees
from borrowers when the value of the loan exceeds the value of the
asset it financed.
Write to Patryk Wasilewski at patryk.wasilewski@wsj.com
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