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Nine Polish Banks Are in Advanced Talks on Swiss Loans, PKO Says

This content was published on March 5, 2021 - 13:40

(Bloomberg) -- Nine Polish banks are coalescing around a proposal for out-of-court settlements with holders of Swiss franc mortgages, according to PKO Bank Polski SA, the nation’s biggest lender.

State-controlled PKO has spearheaded efforts to work out a joint solution to around $31 billion in mostly Swiss franc loans, based on a proposal by the country’s financial regulator and backed by the central bank. Some of its peers, especially those with foreign owners, have been more skeptical toward the plan.

The talks on potential settlements by the group of nine lenders are at a “very advanced stage,” PKO’s Deputy Chief Executive Officer Rafal Kozlowski told a conference on risk management on Friday. “The industry has amassed sufficiently large financial buffers that it can afford it. The Polish economy can afford it.”

The regulator warned this week that leaving the matter to courts could end up costing the industry as much as 234 billion zloty ($61 billion) if all clients decide to sue, compared with about 34.5 billion zloty for the out-of-court deals. The Supreme Court is due to give its guidance on the Swiss mortgage lawsuits on March 25, which some banks said has slowed work on ironing out details of the out-of-court deals.

Poland’s finance minister further dented hopes of any quick deal, telling Bloomberg that lenders can’t expect any incentives for taking part in the program.

Momentum to push through with the settlements has been fizzling after Raiffeisen Bank International AG abandoned such talks last month, saying the proposal doesn’t go far enough to prevent future lawsuits. Banco Commercial Portugues SA, the owner of Poland’s Bank Millennium SA, sees the regulator’s proposal as only “a starting point” for further negotiations.

“The systemic solution has to come up with price tag that is bearable for us,” Miguel Braganca, BCP’s chief financial officer, said in an earnings call on Feb. 26.

©2021 Bloomberg L.P.

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