WARSAW--The Polish government is working on plans to convert
Swiss franc mortgage loans owned by Polish borrowers into zlotys to
reduce private debt and foreign-currency exposure, passing the cost
of the operation onto banks, the prime minister said Monday.
The government will on Wednesday present detailed proposals for
loans denominated in francs after the Alpine currency's recent
appreciation increased the mortgage debts of more than half a
million Polish borrowers only months ahead of parliamentary and
presidential elections.
Protesters took to the streets in several cities over the
weekend to demand relief from franc-linked loans whose
zloty-denominated value in some cases has doubled since 2008 as the
safe-haven Swiss currency has firmed amid Europe's public debt
crisis.
"If I'm given a choice between the interest of banks and the
interest of the people who took those loans, I will stand on the
side of the people at the expense of banks, not the budget," Prime
Minister Ewa Kopacz said on state radio Monday, adding that one of
the proposals from the government will likely be a conversion into
the zloty.
Officials in Warsaw last week reached out to Budapest, where the
Hungarian government last year decided to convert franc loans there
into the forint at a fixed exchange rate. The market rate at the
time was much lower than at present. To reduce the debt burden in
Poland, the government here would have to use a historic exchange
rate of the franc to the zloty, a solution proposed by the
conservative opposition.
A committee comprising Poland's finance minister and the central
bank chief last week instructed banks to pass on negative London
interbank offered rates to their customers to sharply reduce the
interest borrowers pay on franc loans, reducing the banks" profit
margins.
President Bronislaw Komorowski is set to meet the central bank
chief, Marek Belka, on Monday to discuss the loans. Mr. Belka said
last week that using a historic exchange rate for the franc would
violate contracts between banks and borrowers.
The courts may yet rule that foreign-currency loans were illegal
speculation on the part of banks, which would change the rules for
the finance sector, Mr. Belka also said.
Write to Martin Sobczyk at marcin.sobczyk@wsj.com
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