EU Top Court says Polish banks cannot charge for the cost of capital in FX mortgage contracts which have been deemed as invalid, consumers with such contracts can demand compensation from banks

Reaction details (08:54)

• In the wake of this ruling, modest pressure has been seen in Commerzbank (CBK GY) and BNP Paribas (BNP FP). Names which S&P Global previously suggested were among the most exposed due to their respective mBank and Bank Polska units.


• 
  PLN was relatively unreactive.

Analysis details (08:52)

• On February 16th, the EU Top Court Advocate General in the Polish FX Mortgage case says Banks may not demand remuneration for use of capital in contracts rendered invalid. Adding, the possibility of demanding remuneration from banks by consumers should be based on Polish law and decision is up to Polish courts.


• As such, it seems the Court of Justice of the European Union (CJEU) has gone a step further than the Advocate General by saying that consumers with such contracts can demand compensation from banks, instead of leaving it to Polish Courts as the AG initially outlined.

Context

• The decision is in reference to mortgages sold within Poland around the year 2000, mortgages which clients were advised to take out in CHF in order to benefit from lower rates.


• KNF wrote in October 2022 that it has the potential to generate a one-off hit of PLN 100bln for lenders, or circa. 50% of own-funds commercial banks hold, which has the potential to cause bankruptcies or even collapse the domestic financial system.

15 Jun 2023 - 08:45- EquitiesImportant- Source: Newswires