"A sudden conversion would risk a significant weakening of the złoty, and hence a significant increase in servicing costs of foreign currency loans," Belka said. "You could say we would be shooting ourselves in the knee or the foot," he added.
The central bank governor said that the impact of foreign currency lending solutions to the situation in the banks was being analysed by the NBP.
"The NBP board notes that criticism of the proposed solutions primarily relates to erosion of banks’ financial stability. To all those who are surprised that we care so much about the welfare of the banks I want to say that there is almost PLN 850 billion (about EUR 200 billion) of our money there," Belka said, adding this concerns households and businesses alike.
The bill regarding conversion of mortgages denominated in Swiss franks into the Polish zloty is one of the main topics of a three-day sitting of the Senate, which began on Wednesday.
Most indications are that senators will approve the provision introduced by the lower house, the Sejm, that the cost of conversion of foreign currency loans will be 90 percent borne by the banks.
According to the proposed version of the bill, the state budget will lose PLN 5-6 billion (approx. EUR 1.25-1.5 billion).
The issue of compensation has been triggered by the dramatic appreciation in the value of the Swiss franc since January when the Swiss central bank lifted exchange rate controls on the domestic currency, impacting on the estimated 500,000 mortgage holders in Poland, as well as in other countries of the region.
Banks’ stocks have fallen after the amended bill came out allowing homeowners to convert their Swiss franc mortgages into the Polish złoty, which could double the cost to lenders to USD 5 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.
The National Bank of Poland (NBP) has written to a Senate commission about the potential losses resulting from the bill.
The Financial Stability Committee (KSF) has negatively assessed the draft law on the aid for Polish Swiss franc mortgage holders in its current form.
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. (jh/rk)