Moody's: Polish banks will lose PLN36 bln on FX loans conversion

Rating agency Moody's said that the upfront costs to banks to convert foreign-currency mortgages (mostly Swiss franc-denominated) into the local currency, the złoty, would be credit negative for banks because it would result in one-off losses, net of annual profits, of PLN36 billion at the time of implementation. This would reduce the system’s capital by up to 27% and hurt their ability to lend and absorb future shocks. Last week, the National Bank of Poland calculates the cost of the Presidential foreign mortgage bill to be at least PLN 44 billion. Within this figure, PLN 35 billion would be required to convert the mortgages from Swiss francs to złotys at the favorable rates proposed by the President's cabinet. Another PLN 9 billion would go to covering the mortgage spreads of the holders.