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GE to seek compensation for unit BPH if Swiss franc bill hits banks

PR dla Zagranicy
Jo Harper 25.08.2015 13:42
US firm General Electric said it will seek compensation for losses incurred by its Polish unit, Bank BPH, if legislation is passed compensating holders of Swiss-franc denominated mortgages.
Photo: cc/Wikimedia CommonsPhoto: cc/Wikimedia Commons

GE Capital CEO Keith Sherin said GE saw possible damage to BPH from the planned legislation, currently awaiting the upper house’s deliberations next week.

BPH fell 10 percent on the Warsaw bourse on the day the bill on the conversion of Swiss franc-denominated loans into the Polish zloty was passed by the lower house of parliament, or Sejm, in early August.

"The GE Group intends to seek full compensation for any damage caused by the adoption and signing of the bill," a GE letter published online by the Polish Senate read.

The lower house of parliament passed a draft law this month that would allow 47 percent of Swiss franc mortgage holders to convert their loans to zlotys at the banks' cost.

Just over half a million Poles currently hold Swiss franc-denominated mortgages. The majority borrowed the money before the 2008 global financial crisis, when it was possible to benefit from low Swiss interest rates.

Under an initial version of the bill as proposed by the ruling Civic Platform party banks and borrowers would convert the loans and split the costs equally among themselves.

An amendment from the Democratic Left Alliance was unexpectedly passed, increasing the bank contribution to 90 percent.

Meanwhile, opposition party Law and Justice has its own proposals on how to help those struggling with mortgage repayments. The plan would involve banks being forced to convert Swiss-franc loans at the exchange rate from the day when each mortgage was issued. However, the Finance Ministry has claimed that this would cost banks PLN 50 billion.

Among lenders with the biggest Swiss franc loan books are PKO BP and Getin Noble, as well as the Polish banking businesses of Santander, Commerzbank, BCP, Raiffeisen and General Electric. Getin is the most exposed to Swiss franc loans, Fitch said.

Commerzbank, which owns mBank, wrote on Tuesday in a letter sent to Polish authorities that the bill if enacted would infringe EU law and the Polish constitution. The bank said that a passing of the FX mortgage conversion bill would have "very negative" consequences for mBank and the Polish banking system. (jh/rk)

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