Polish Lawmakers Push Ahead With Foreign-Currency Mortgage Bill
(Bloomberg) -- Polish lawmakers moved forward with a controversial bill to help foreign-currency mortgage holders despite objections from European banking executives and diplomats who say it violates European Union rules.
Parliament’s finance committee approved a draft of the law and sent it for a vote in the full house after two days of debate. It calls for commercial lenders to contribute as much as 0.5 percent of the value of their foreign currency mortgages every quarter to a special fund to facilitate voluntary conversion of the loans to zloty.
The plan to impose annual fees of as much as 3.2 billion zloty ($840 million), or a fifth of industry’s yearly net income, to build the fund spurred protest from the lenders most heavily exposed to troubled mortgages, such as Deutsche Bank AG, Raiffeisen Bank International AG and Banco Comercial Portugues SA. They urged the the European Commission to block the proposed levy. Polish politicians received a similar message from the ambassadors of Germany, Austria, Spain and Portugal.
Lawmakers in the committee failed to remove a controversial part of the bill that says banks would lose access to some of the money in the fund if they fail to reach loan conversion goals over a six month period. However, banks taking part in mandatory restructuring, such as Getin Noble Bank SA or Bank Ochrony Srodowiska SA will be excluded from contributions.
The ruling Law & Justice party as well as the government played down the CEOs’ concerns, rejecting a motion for further study into its legal standing. The regulation reflects key campaign promise for President Andrzej Duda, backed by the ruling Law & Justice party in 2015. Poles still hold $34 billion of foreign-currency mortgages.
If approved, the bill is expected to take effect from start of July. Representatives of borrowers’ organizations criticized the bill, saying that it doesn’t offer sufficient help, instead creating the tool for banks to motivate clients to book their currency losses via a conversion mechanism.
The WIGBank index of Warsaw-listed lenders dropped 0.6 percent as of 3:45 p.m., while the benchmark WIG20 gauge declined 0.9 percent.
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