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Bloomberg
Poland’s financial regulator wants offer incentives to banks that decide to start settlements with borrowers in the latest attempt to resolve the country’s $32 billion foreign-currency mortgage debacle.
The plan would allow banks to tie up less capital against Swiss franc loans once they
decide to start deals with borrowers, according to a proposal by the industry regulator floated in newspaper Dziennik Gazeta Prawna.
The proposal comes as industry talks about out-of-court deals have stalled, leading PKO Bank Polski SA, the country’s largest lender, to decide to go it alone with a plan to sacrifice as much as two years of profits to close the chapter on its legacy lending.
Multiple lawsuits from clients have depressed bank earnings and hammered their stocks.
In the latest proposal, the industry watchdog would allow lenders to apply lower risk weights for Swiss franc mortgage on their books depending on the amount of provisions they set aside for settlements.
Banks currently have to keep 150% of capital against foreign-currency loans compared to just 35% in the case of zloty mortgages. The more provisions lenders set aside for settlements, the lower the risk weights which will be applied, according to Dziennik Gazeta Prawna.
“Our suggestion is that such a sliding scale will apply for a period of up to one-and-half years,†Michal Kruszka, a director at the financial watchdog KNF, told the newspaper.