WARSAW: The Polish banking sector could have to write off PLN 22 billion from their FX mortgage books as some 33% of CHF-mortgage borrowers would qualify for a relief program recently passed by the Sejm lower house of parliament, financial authority KNF said in an opinion for the Senate upper house.
Banks would be forced to write down PLN 21.9 billion in loans if the bill is approved by the parliament in the current shape, the KNF said of its accounting. Of that sum, write offs on loans granted in 2007-2008 at the most disadvantageous FX rates, would amount to PLN 18.2 billion.
Any additional payments made by clients (potentially to balance the value of installments paid to date in line with terms of the new bill) could decrease the eventual loss after write-downs by some PLN 1.4 billion. KNF estimates that for the ten surveyed banks, the value of loan write-offs would exceed their annual profits. For six of those banks, the losses tied to write down would exceed three-year earnings, KNF said.
Additionally, the write-offs could also trigger need for capital increases. For six banks, the write-offs would consume over 20% of their equity. KNF calculations are based on the assumption that all persons eligible would take advantage of the relief program as passed by the lower house. That bill has since gone to the Senate for consideration. The initial version of the bill, which split the FX loss on conversion evenly between bank and client, would have forced write offs of PLN 13.6 billion, including PLN 11.2 billion on loans granted in 2007-2008.
