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Polish Homeowners Take On the Banks…and Win


It’s not often that the everyday consumer takes on one of the world’s financial giants and actually wins. It’s the classic David vs Goliath tale, though one in which Goliath almost always has the upper hand.

Nevertheless, a recent victory for more than half a million indebted Polish homeowners has demonstrated the importance of standing up for what’s right.  Following a legal battle that’s been raging for several years, hundreds of thousands of struggling Poles have won the right to exit their over-inflated Swiss Franc mortgages.

It’s estimated that around 20% of all mortgages in Poland are held in Swiss Francs.  With the value of the Swiss Franc having doubled over the past decade, Polish homeowners with Swiss Franc mortgages have faced crippling and continuously rising debts. However, a ruling reached by the European Court of Justice will allow those affected to request that their loans be converted to the Polish Zloty.

While the ruling was welcomed by Polish consumer groups and political activists, government officials highlighted its potential implications for the country’s banking sector. Finance Minister Jerzy Kwiecinski stated that Polish banks would likely face collective losses running into tens of billions of zloty.

Foreign Currency Mortgages

Following Poland’s entry to the European Union in 2004, it’s estimated that approximately 700,000 households signed into foreign currency mortgages.  Attracted by low interest rates and heightened accessibility, foreign currency mortgages were snapped up by millions across Poland, Austria, Croatia and Hungary.

At the time, the Polish Zloty was performing well and the Swiss Franc mortgages on offer represented excellent value for money. However, the value of the Zloty started to fall sharply as the financial crisis escalated, just as the Swiss Franc was surging. Later in 2015, the Swiss Franc’s currency ceiling against the Euro was abandoned, delivering a hammer-blow to hundreds of thousands of Polish borrowers.

This meant that while around half a million Polish households entered into mortgages when the value of the Swiss Franc was less than 2pln, its value had sense skyrocketed to more than 5pln. It has since fallen back to around 4pln, but this still equates to around double the original debt taken on by an extensive audience of borrowers across Poland.

Figures show that at one point in time, approximately half of all mortgages in Poland were held in Swiss Francs. Even today, it’s estimated that around 23% of Polish mortgages are in Swiss Francs, according to the latest figures published by Erste Group.

European Court Intervention

It’s been a long and difficult fight, culminating in approximately 16,700 claims being lodged by borrowers demanding that their loans be converted into the national currency of Poland. Several cases have been brought before the highest courts in Poland – the case of Kamil and Justyna Dziubak having ultimately been referred to the European Court of Justice.

The basis of the couple’s complaint focused on the unfairness of the Swiss bank that provided their mortgage being able to fix the exchange rate by itself. The ECJ ruled that the couple had the right to ask the courts in Poland to convert their mortgage to the Polish Zloty, paving the way for hundreds of thousands of borrowers across Poland to do the same.

According to Mrs Dziubak, the saga and its eventual outcome clearly illustrates the importance of having the courage to challenge the banks where necessary.

Inevitably, the Polish banking sector and indeed the country’s wider economy is expected to take a substantial hit as a result of the ruling. Should the majority of borrowers with Swiss Franc mortgages request conversion to the Polish Zloty, the estimated cost for the banking sector could be anything from 20 billion to 60 billion Zlotys.

Share values for Poland’s leading bank – PKB Bank Polski – have already fallen 2% in the wake of the ECJ ruling.

Last Updated: Oct 8, 2019 @ 4:27 pm
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