Awaiting key EU ruling

WARSAW: Like hundreds of thousands of other Poles, 42-year-old Piotr Zientala anxiously awaits a crucial EU court ruling Thursday on the legality of Swiss franc mortgages which could determine his financial future.

On the other side, economists warn that if the European Court of Justice (ECJ) decides in favour of borrowers mired in debt, a flood of lawsuits could prove very costly for the banks and the Polish economy.

Zientala recalls that when he decided to buy a family apartment in 2008, he had hoped to acquire a mortgage in the Polish zloty currency, “but my bank, where I’d been a customer for 10 years, said no.”

“They then proposed a loan in Swiss francs. The bank advisor used figures and charts to convince me that it was beneficial and risk-free for me,” he told AFP.

A file photo shows people walking away from the entrance of the European Court of Justice (ECJ) in Luxembourg, on October 5, 2015. Photo: AFP

But six months later, the Swiss franc exchange rate was soaring, from 2.03 zloty to over three. By 2015, it topped five zloty.

“So I stopped paying,” Zientala said.

Today the Swiss franc is at around four zloty. A decade after he took out the mortgage, Zientala still owes 600,000 zloty — or double what he borrowed initially.

“I discovered unfair terms in my contract so am now suing my bank,” Zientala said.

In such foreign currency loans, the banks were notably able to freely reset the franc rate and did so as the Swiss unit, a traditional investor safe haven, rose sharply, leaving borrowers struggling to repay their loans.

The ECJ rules Thursday on a loan taken out by the Dziubak family in Poland.

If the Luxembourg-based court affirms the opinion delivered by its advocate general in May, the family would be free to decide the fate of their mortgage. – AFP