MBank eyes circa 5B zlotys in CHF mortgage conversion costs under FSA's proposal

Commerzbank AG's Polish unit mBank SA estimates that converting its CHF mortgage portfolio into zlotys in line with the recent proposal of the Financial Supervision Authority would cost it between 4.7 billion zlotys and 5.4 billion zlotys, depending on whether the conversion would apply to only active loans or both active and repaid loans.

The FSA proposed in December 2020 that banks offer borrowers attractive settlements on foreign currency mortgage disputes to avoid lengthy court proceedings and legal costs, with zloty-denominated mortgages serving as a reference point in the potential settlements.

MBank said in its fourth-quarter financial report that it has not yet made any decisions on offering settlements to its clients according to the FSA's proposal, which is currently subject of further analysis and discussions with financial authorities. However, the lender's CEO Cezary Stypułkowski referred to the FSA's proposal as the most far-reaching and reasonable way to solve this CHF mortgage problem, news agency PAP reported Feb. 9.

As of the end of 2020, the bank was involved in 7,508 individual court disputes with CHF mortgage holders, up from 3,715 disputes one year earlier, with the number likely to grow further. Throughout the year, the lender set aside over 1 billion zlotys in provisions for legal risks associated with the CHF mortgage portfolio, including a provision of 633 million zlotys in the fourth quarter, PAP noted.

As of Feb. 8, US$1 was equivalent to 3.72 Polish zlotys.