Poland will not freeze CHF exchange rate, banks will lower loan margins

Poland will not freeze the PLN/CHF exchange rate for Polish banks Finance Minister Mateusz Szczurek told TVN24 BiŚ after a meeting of the Financial Stability Committee on Tuesday. "Freezing the exchange rate would make the losses permanent. We do not know what will happen on the financial market in the coming months," Szczurek said. Another major issue discussed at the meeting was whether Polish banks will include the negative LIBOR interest rate in their mortgage loans, thus lowering their margins. In a situation where the borrower bears the risk of the exchange rate, banks have to carry the risk of the interest rate, otherwise it would be a "gross violation of risk symmetry," the Finance Minister said. He added that the decision of the European Central Bank on January 22 whether or not to launch its QE policy will be important. The Financial Stability Committee monitors the situation on the Polish financial market. It is chaired by the Finance Minister and includes the heads of the National Bank of Poland and the Financial Supervision Authority, the president of the Bank Guarantee Fund and the president of the Office of Competition and Consumer Protection. The Tuesday sitting included as well representative of several banks with large portfolios of CHF-denominated mortgage loans. Poles have some 600,000 mortgage loans denominated in the Swiss franc, altogether valued at PLN 160 billion after the appreciation of the franc, which corresponds to 9.4 percent of Poland's GDP.