Polish President Andrzej Duda defended his plan for resolving the Swiss-franc mortgage issue as a good compromise, even though the government's economy minister said the cost of the plan was a threat to the country's banks.
Last month, the president's office offered a draft law to saddle banks with the costs of converting Swiss franc loans into zlotys. Critics say the plan could undermine one of the healthiest banking sectors in Europe.
"In my opinion, such a bill should have been passed a long time ago," Duda, an ally of Poland's ruling Law and Justice (PiS) party, told Reuters. "This is a project which is a compromise and which is balanced."
Polish banks hold a combined $43 billion in foreign currency debt, mainly in Swiss francs, taken out when the franc was weaker and the loans were easier for Polish consumers to repay. The total is almost half of Polish mortgage lending and 10 percent of Poland's gross domestic product.
The draft bill calls for converting the loans from francs to zlotys at a "fair" rate. The rate would be set individually for each loan but would be cheaper than the market rate, now about 3.97 zlotys to the franc. Banks would pick up the difference between the original value of the loans and the new value.
The central bank estimated converting the loans to zlotys would cost banks 44 billion zlotys ($11.2 billion), roughly four times the banking sector's 2015 net profits.
Mateusz Morawiecki, a former banking manager and now economy minister in the PiS government, said such losses would threaten the health of the banks, signalling Duda will not push his idea. His remarks echoed comments by ratings agency Moody's Investors Service earlier in the week.
However, Duda said, "many experts question the sum." He added he was waiting for a final opinion from Poland's financial watchdog, KNF, expected next month.
"I think this bill is reasonable, but I am waiting for KNF's opinion. I am also ready to talk to the finance minister ... I think it should be passed relatively soon, as there are many people who need it."
The bill is part of PiS's election promises, which pushed it to power last year. The new government has already passed a costly child benefit scheme, to be co-financed by a new bank asset tax and a possible retail tax.
The president signalled that the draft bill on raising the tax-free income sum that he sent to parliament may be implemented gradually.
"I am aware of the reality. It is not so, that the sack has no bottom and that one can just take from it ... maybe the Finance Minister will have to postulate phasing some processes, but I believe that all commitments will be implemented before the term's end," Duda said.
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