WARSAW: Polish banks risk a new nightmare scenario after an adviser
WARSAW: Polish banks risk a new nightmare scenario after an adviser to the European Union’s (EU) top court says they can’t seek extra remuneration from thousands of customers whose risky Swiss Franc-denominated mortgages were annulled after being deemed unfair.
In cases where contested mortgage deals are voided by local courts, lenders can’t claim payments beyond reimbursements of the loan principal, advocate general Anthony Collins of the EU Court of Justice said in a non-binding opinion last Thursday.
Consumers affected by annulled mortgage deals, on the other hand, could go after the lenders for additional sums beyond the cost of capital already repaid, which hasn’t been a common practice in these disputes till now. National tribunals will have to decide on each case. The top EU court’s final ruling normally follows within six months.
“A bank is not entitled to assert against a consumer claims that go beyond reimbursement of the loan capital transferred and payment of default interest at the statutory rate from the date of the request for reimbursement,” Collins said in his opinion in Luxembourg. Banking stocks plunged in reaction to the opinion, with the Warsaw WIG-Bank index dropping as much 3.1%.
Polish banks still tackle mounting legal issues stemming from some US$12bil (RM53.2bil) worth of outstanding Swiss-franc home loans. A Warsaw court in 2021 sought the EU judges’ view on whether banks can continue to sue clients for additional payments. It’s been a way for the industry to recover lost interest, fees and also to deter future litigation, because banks have been losing most of the legal fights.
Lenders argue that no compensation leads to the scenario that clients get interest-free mortgages and may attract more lawsuits beyond the more than 50,000 cases that are already pending in Polish courts. Borrowers have fought against further remunerations for banks, arguing that banks that applied abusive clauses to arbitrarily set foreign exchange rates needed some penalty to prevent further such scenarios in the future. — Bloomberg
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