- Title: Top EU court backs Polish consumers over Swiss Franc mortgages
- Date: 3rd October 2019
- Summary: WARSAW, POLAND (OCTOBER 2, 2019) (REUTERS) JACEK SLEDZINSKI, 45, LAWYER AND HOMEBUYER WHO TOOK OUT MORTGAGE IN SWISS FRANCS WALKING IN A PARK (SOUNDBITE) (POLISH) JACEK SLEDZINSKI, 45, LAWYER AND HOMEBUYER WHO TOOK OUT MORTGAGE IN SWISS FRANCS, SAYING: "I still have 15 years to pay on my mortgage. I took the mortgage 15 years ago and today the amount of capital I still have to pay off - that's what is what matters for a homeowner most - the amount which varies slightly according to currency fluctuations but basically it is more or less the same as the amount I borrowed when I bought the property. So despite paying the debt off for fifteen years, the amount I owe has not gone down." VIEW OF PARK (SOUNDBITE) (POLISH) JACEK SLEDZINSKI, 45, LAWYER AND HOMEBUYER WHO TOOK OUT MORTGAGE IN SWISS FRANCS, SAYING: "The European Court of Justice will of course be very important because it will become a "road sign" for Polish courts on how to rule in cases like this." CUT AWAY (SOUNDBITE) (POLISH) JACEK SLEDZINSKI, 45, LAWYER AND HOMEBUYER WHO TOOK OUT MORTGAGE IN SWISS FRANCS SAYING: "We can certainly say that it is a huge disappointment that Poland is the last country in the region which has not approached the problem in a serious way. I know that a similar problem that happened in other countries of the region and it has been more or less solved. We can certainly say that there is disappointment and disgust because our government has not done anything about it. On the other hand the rhetoric that we have seen which shifts the burden on borrowers by saying that they knew what they were doing, they did not have to borrow, this is all true but one must remember the context, the nature of making a credit deal. When we go to a bank we meet an advisor who is supposed to advise us and it is my right to expect that I will be given the best advice possible, advice that would serve my interests. So when someone tells me today that I had the right to choose, of course I had the right to choose but I also had the right not to be cheated by someone who was advising me." SLEDZINSKI LOOKING AT HIS PHONE VARIOUS OF BANKS EXTERIORS - MILLENNIUM BANK, BANK POLSKI PKO, SANTANDER, BNP PARIBAS (TOOK OVER RAIFFEISEN), NOBLE BANK, MBANK
- Embargoed: 17th October 2019 13:53
- Keywords: EU Court of Justice Swiss Franc mortgage Polish homeowners consumers banks foerign currency mortgage
- Location: WARSAW, POLAND / LUXEMBOURG CITY, LUXEMBOURG
- City: WARSAW, POLAND / LUXEMBOURG CITY, LUXEMBOURG
- Country: Poland
- Topics: Debt Markets,Economic Events
- Reuters ID: LVA002AZJMSE1
- Aspect Ratio: 16:9
- Story Text:The European Union's (EU) top court ruled on Thursday (October 3) in favour of Polish consumers who took out mortgages in Swiss Francs, allowing them to ask Polish courts to convert the loans into the local currency in a blow for lenders.
Changing the terms of the loans, which had become prohibitively expensive after the Swiss franc jumped in value, means Polish banks will have to refund some customers. But the verdict was not an outright victory for borrowers because it will be up to Polish courts to decide on a case-by-case basis how the contracts are altered.
An index of Polish banking stocks was down 0.87 percent at 1115 GMT, with PKO BP, the country's largest bank, down 1.5%.
The banks with the biggest FX mortgage portfolios include units of Santander, BCP, BNP Paribas and Commerzbank, as well as Poland's biggest lender PKO BP and Getin Noble Bank.
France's BNP Paribas, Germany's Commerzbank and Portugal's BCP all have foreign-exchange denominated mortgage portfolios in Poland.
Attracted by lower interest rates some 700,000 Poles took out mortgages in foreign currencies, mainly in Swiss francs, nearly a decade ago. They are now paying far bigger installments than they expected after the Swiss franc soared against the local zloty currency.
Foreign currency loans total 124 billion zloty ($31 billion), almost one third of all Polish mortgages, and Wednesday's court verdict is expected to encourage more borrowers to sue for refunds.
Currently there are more than 11,000 cases running in courts, but in the first half of 2019 the number of lawsuits jumped 39% to 2,021, as the fee for triggering cases was slashed.
Poland's bank lobby group, ZBP, said on Wednesday that the verdict would likely cost banks less than their previously expected estimate of at least 60 billion zloty ($15.13 billion) spread out over a number of years.
FX loans have been an issue in other central European countries, but different countries have taken different approaches to dealing with them.
In Hungary, Viktor Orban's government in late 2014 eliminated billions of euros worth of such mortgages, penalising banks heavily. The loans were converted into Hungarian forint. The central bank supported lenders with FX reserves.
Poland's ruling nationalist Law and Justice (PiS) party ruled out state help for borrowers in 2017 saying instead that debtors should ask the courts for help. Some poor borrowers are, however, eligible for support from a special dedicated fund.
In Croatia, thanks to legal changes in 2015, most foreign currency denominated loans were converted into euros, at the expense of the banks.
A recent ruling by Croatia's Supreme Court means these borrowers can individually sue banks for compensation, although the lenders are trying to reverse that ruling in the Croatian Constitutional Court and EU courts.
In Slovenia, several cases are going through the courts, with some ruling in favour of the banks, while others have backed the borrowers. The majority of cases have not been finalised, however, as most can appeal to a higher court.
(Production: Bartosz Karcz, Anya Dabrowska)
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