EBA issues Opinion to the Ministry of Finance of Poland on measures in accordance with the notification of higher risk weights set for immovable property

EBA has issued an Opinion in response to a notification from the Ministry of Finance of Poland regarding measures related to foreign currency housing loans. Poland intends to extend a measure introduced in March 2022 to limit risks associated with these loans by encouraging banks to settle with borrowers. EBA does not object to this extension, which will last for an additional 24 months, pending a periodic assessment in accordance with regulations.
Under this measure, risk weights for foreign currency housing loans vary depending on the extent of loan loss provisions, write-offs, or adjustments made in connection with settlements. The purpose of this measure is to address financial stability concerns in Poland stemming from foreign currency housing loans and the uncertainties related to litigation and settlement costs. EBA acknowledges these concerns and supports the measure as a means to reduce legal risks and promote financial stability in Poland.
EBA emphasizes the need for continuous monitoring of the situation and periodic reassessment of the appropriateness of risk weights to ensure they reflect actual risks. EBA’s opinion is based on the evidence provided by the Ministry of Finance of Poland and the understanding that the measure is beneficial for reducing banks‘ exposure to foreign currency housing loans and associated legal risks.