Millennium Bank aims to settle Swiss franc issue, sees no need to raise capital

Bank Millennium, the Polish unit of Portuguese lender BCP, sees no need to raise capital to cover the costs of potential settlements with clients over Swiss franc loans, the bank’s management said on 11 May.

The Polish Supreme Court was expected to issue a highly anticipated guidance on FX loans later that might have an impact on the way banks reach settlements with their clients, whose loan repayments ballooned due to Swiss franc appreciation against the zloty.

The court’s building has, however, been evacuated due to a bomb threat.

Foreign exchange loans and especially Swiss franc mortgages, remain a major risk factor for Polish banks, which face an increased number of lawsuits from franc mortgage holders.

Millennium reported a loss of 311 million zlotys ($82.8 million) for the first quarter mostly due to provisions for risks related to foreign currency loans.

Polish financial market regulator KNF proposed in December that lenders could offer voluntary settlements to their clients, including retrospectively settling Swiss franc mortgages as zloty loans.

Millennium’s Chief Executive Joao Bras Jorge praised KNF’s proposal and said Millennium will likely take its decision on potential settlements with clients between August and September.

The bank will not have to raise capital to cover the settlement costs, he added.

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