Poland to have temporary relief on CHF mortgage conversion

The Polish zloty had a better time last week, with EUR-PLN dropping from 4.24 early last week to below 4.21 levels by the end of the week, PLN outperformed HUF over this period too. One PLN-supportive development was the abandonment of the infamous CHF mortgage conversion bill which ruling party PO had presented to parliament in the summer. 

The proposal initially was that CHF borrowers who were 'under water' could convert their mortgages to local currency at the historical exchange rate, and banks would share 50% of the FX loss, later, this bill was amended by Opposition pressure to increase the banks' share of the loss to 90%. 

This bill has been a source of major concern for the Polish banking sector. But now, the parliament's public finance committee has ruled that it will not push the bill through because of the many "constitutional doubts" it involves. CHF conversion legislation will again be taken up only after the new government is in place in late October. 

"This is only temporary relief, though, Opposition PiS is leading in all major polls and is unlikely to forget this issue. If PiS forms the government, a harsher version of the same FX conversion bill can be expected, with larger loss implications for banks, to be launched", says Commerzbank.