WARSAW (Reuters) – The problems with Swiss franc mortgages taken out in Poland are mainly the result of the increase in the value of the franc, not the terms of the contracts, Polish financial regulator KNF said on Thursday in an opinion submitted to the court supreme.
Banks and mortgage lenders were left in limbo in May when the Supreme Court delayed guidelines on how lower courts should handle cases involving foreign currency loans, prolonging uncertainty over the resolution of a major risk facing the financial sector.
Thousands of Poles took out loans in francs more than ten years ago to take advantage of lower interest rates, but faced much higher costs when the value of the Swiss currency soared. Many have sued the banks for terms they deem abusive.
“(The problem) results mainly from variations in the exchange rate of the zloty… and from the massive takeover by customers (consciously or
unconsciously) of the exchange risk over the horizon of several decades, and not of the legal aspects concerning the structure of the contracts, ”said the KNF.
In December, the KNF proposed an out-of-court settlement plan in which the loans would be treated as if they had been taken out in zlotys, but most banks wait for the Supreme Court’s decision before deciding on the march to to follow.
On Thursday, the KNF reiterated its call for disputes between banks and mortgage creditors to be settled out of court.
He reiterated that he estimated the cost of his settlement plan at 34.5 billion zlotys ($ 9.05 billion). In the worst-case scenario for banks, the KNF estimates that the cost of court cases could reach 234 billion zlotys.
($ 1 = 3.8140 zlotys)
(Reporting by Alan Charlish and Pawel Florkiewicz; Editing by Emelia Sithole-Matarise)