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Poland to encourage settlements in FX loan cases

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© Reuters. Swiss franc coins are seen in a cash drawer in this picture illustration in Bern January 16, 2015. REUTERS/Thomas Hodel

WARSAW (Reuters) – Poland plans to encourage banks to offer holders of FX mortgages out-of-court settlements by lowering the risk weighting attached to the loans if lenders offer this option, according to a draft amendment published on Monday.

The move would lower the capital reserves banks need to hold to cover the risk related to the loan portfolios, encouraging them to offer such settlements.

Thousands of Poles who took out Swiss franc loans more than a decade ago to take advantage of lower interest rates found themselves struggling to meet the costs of servicing them when the value of the Swiss currency shot up.

Many have taken banks to court over clauses they say are abusive, creating a major risk for lenders.

“Due to the effectiveness of out-of-court dispute resolution … it is justified to create regulatory incentives for this type of process to cover a wide range of foreign currency housing loans,” the finance ministry, which is proposing the amendment, said.

It added that the “widest possible involvement” of banks in offering settlements to their clients was important for financial stability.

The amendment proposes that risk weighting for FX loans be reduced from 150% now to 50%, 75% or 100% depending on the level of capital reserves involved.

Poland to encourage settlements in FX loan cases

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