Rapid restatement banks – Republic

Source: Bloomberg

Following the adoption by parliament modified the law on currency translation of loans frankowych shares of some banks are losing today after more than 15 percent. Terribly overrated are Getin Noble Bank, Millennium and mBank. The cost for the sector could amount to 19 billion zł.

Just before the hour. 11 share price of Getin Noble Bank fell by up to 28.8 per cent., To 0.79 zł, Bank Millennium by 17.9 per cent., To 5.05 zł, mBank by 12.6 per cent., To 327 zł (their quotations were temporarily suspended). PKO BP, the largest Polish bank, got cheaper by 11.1 per cent., To 26,47 zł, while BZ WBK, the third largest market, with 8.3 per cent., To 279.5 zł. This is not the case – all have large exposure to mortgages in Swiss francs. But falling rates also less involved in francs banks – Alior, Pekao and Trade.

Late last night parliament adopted a law conversion loans in francs proposed by the PO (modified amendments SLD). According to the Act, the bank will calculate the difference between the current debt and the theoretical, if customers years ago took a loan of gold. The bank has to cover these losses in as many as 90 per cent. The rest is converted into preferential loan, the interest rate would amount to as much as NBP reference rate – currently 1.5 percent. Originally it proposed that the cost in half took on the bank and the borrower. The Act provides that the conversion will also be original loan for an apartment. After the changes he would bear interest as if it were incurred in dollars.

– Increase the proportion of umarzanej part of the loan at the expense of the banks clearly increases the potential losses for the sector since the conversion becomes cost effective for a larger group of borrowers. The original design was by our cost-effective only for loans in the second and third quarter of 2008 at CHF / PLN below 2.15, and the cost for the sector could be closed in the amount of approx. 5 billion zł. Currently, this should be beneficial for clients who took credit in 2007 or 2008, when the exchange rate of CHF / PLN below 2.50. Without taking into account any restrictions (LTV & gt; 80%, surface & lt; 100 m2, none of the other apartment) conversion should apply for loans of CHF with a value of approx. 92 billion zł, and potential damage to the industry would amount to approx. 32mld zł – says Maciej Marcinowski, an analyst Trigon DM.

It is assumed, however, that the restriction on LTV will reduce the number of eligible customers by 20 per cent., and the test surface and having a second housing by a further 20 percent. – Finally, so we estimate that the cost to the sector could amount to approx. 19 billion zł. Under the original justification for the bill, we assume that this cost will be spread across three years in the proportion of 40% -39% -21%. Analysed by our banks heavily involved in loans CHF they have approx. 2/3 of the total portfolio in the industry and they bear most of the burden. Relatively hardest hit GNB and the Millennium, and the least BZ WBK. In the case of GNB cost of conversion may exceed the bank’s annual profit before taking into account the bank tax, so there is a high risk of the share issue. We believe that if the bill passes through the Senate that the new president will sign it – adds Marcinowski.