Jakubiak: FX mortgage loan conversion may induce financial crisis
15:15
Andrzej Jakubiak, head of the financial watchdog KNF, has warned that the presidential project of the FX mortgage loan conversion may lead to a financial crisis.
Jakubiak said that in the most likely scenario, six banks would have capital adequacy ratio below the legally required eight percent, and five banks would have to be closed as their own funds would fall below 50 percent as required by law in the case of mortgage loans.
The value of deposits guaranteed by the Bank Guarantee Fund in these banks amounts to PLN 137.8 billion and the fund has only PLN 10 billion at its disposal. In the case of a bank going under, a chain reaction could be triggered.
"We show that there is a real risk of shifting burden of some borrowers onto all others. We say that this could undermine confidence in the system and cause a financial crisis. I can not imagine that if this is the case, the state would not have to intervene. But the question is at what cost," Jakubiak told the Polish Press Agency (PAP).
KNF said in a report, issued mid-March, that the burden for the Polish banking sector of conversing the FX mortgage loans would likely amount to PLN 67.2 billion. Earlier, the central bank NBP calculated the cost of the Presidential bill to be at least PLN 44 billion. In a separate report the NBP declared that the FX mortgage bill would have a negative impact on the stability of the public finance sector.
