Polish Bank at Last Reckons With Mortgage-Loan Disaster

Poland’s MBank SA and ING Bank Slaski SA are recognizing potential losses from legal battles over Swiss-franc loans, moving the industry closer to resolving a dispute that has long clouded its prospects, Bloomberg News reported. The unit of Commerzbank AG set aside a record 439.5 million zloty ($118 million) to cover risks from its foreign-currency mortgages in the final three months of 2020, likely putting the lender in red for the quarter. ING Slaski followed with a 250 million zloty quarterly hit, boosting provisions to a whopping 35% of its non-zloty loans, roughly four times more than its competitors. The decision by ING Slaski, whose exposure to Swiss franc loans is dwarfed by rivals, could herald a change in tone for the industry as it signals that lenders may be finally preparing the ground for out-of-court settlements. “ING has showed a very conservative approach to FX-loan risk, reflected by a worsening situation for lenders in courts,” said Lukasz Janczak, an analyst at Ipopema Securities in Warsaw. “Such a high scale of provisioning may also indicate that the bank is preparing for settlements with clients proposed by financial regulator.” Last month, the watchdog proposed that banks should offer customers out-of-court settlements, in which they treat such loans as if they had been denominated in the local currency. Such a solution would force banks to take significant one-off losses, but could alleviate legal uncertainty in the long-run. Read more.