ECJ supports Polish bank customers in dispute over Swiss franc loans – Commerzbank subsidiary suffers defeat in court

The European Court of Justice (ECJ) has once again backed up Polish bank customers and declared a defeat for the Commerzbank subsidiary mBank. The ruling concerns abusive foreign currency loans and means that Polish borrowers do not have to declare in court that they do not agree to contracts that are already invalid. In addition, when repaying the foreign currency loan, consumers are not obliged to pay the interest that the bank would have charged if the contracts had continued to exist. The EU court justified its decision by saying that the documents had become invalid anyway.

Loans in Swiss francs became particularly popular in Poland and other Eastern European countries from 2004 onwards. The banks offered these at a much cheaper interest rate compared to loans in the local currency, zloty. However, property owners later had a rude awakening: Due to the economic crisis in 2008, the exchange rate of the Swiss franc rose rapidly. A further appreciation occurred in 2015 after the decoupling from the euro. Monthly mortgage payments for Polish borrowers increased dramatically, and in many cases the volume of mortgages exceeded the value of the properties.

As a result of the verdict, Commerzbank shares fell 4.1 percent, making them the weakest stock in the Dax. The securities of mBank, in which Commerzbank holds the majority, also fell on the Warsaw stock exchange.

Commerzbank has already had to shoulder burdens worth millions for its subsidiary. The additional provision results from an adjustment to the model for measuring provision for legal risks as a result of a European Court of Justice ruling in mid-June on the foreign currency loans of a competitor of mBank. In total, mBank’s provisions for legal risks from the Swiss franc loans amount to around 1.7 billion euros. (eulerpool-AFX)