Polish banks cannot force clients to foot the bill if mortgages taken out in a foreign currency turn against them, the EU top court ruled on Thursday, in a judgement that could cost the banks billions of euros.
Poles had been lending money to finance property in Swiss francs for years, benefitting from low interest rates. But costs sky-rocketed when the Polish zloty fell against the franc, in some cases even doubling.
Two borrowers had challenged Poland’s Raiffeisen Bank International before the Polish national court, asking for their mortgages to be declared invalid, arguing the contracts were unlawful and unfair.
The Polish national court brought the case before the European Court of Justice in Luxembourg, asking how it should deal with these contracts, which contain clauses which are abusive to its customers.
The European Court of Justice agreed that the clauses are unfair, and borrowers can now ask the Polish courts to have their loans converted into zloty (PLN) while keeping the Swiss franc interest rate.
Raiffaisen Bank refused to comment on the ruling.
Other Polish banks with substantial Swiss franc mortgage portfolios – including Getin Noble Bank, Millennium Bank and mBank – also refused to comment, insisting the issue was specific to Raiffaissen Bank.
The legal changes resulting from the ruling will impact their business sooner or later, these banks say, but they hope this will take years.
“In any case, any well governed bank should have strong reserves set aside for legal risks. These should allow to absorb any potential shocks,” one of the bankers directly involved in the discussions told the Luxembourg Times, asking not to be named.
Data from the Polish banking association ZBP, shows that 2% of clients with mortgages in Swiss francs have decided to fight the banks in Polish courts. Bankers would not say whether they thought that more people could be encouraged to act after Thursday’s rulling.
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