EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 29 July 2016  
on specific rules for restructuring loans indexed or denominated in foreign currency  
(CON/2016/39)  
 
Introduction and legal basis  
On 15 June 2016 the European Central Bank (ECB) received a request from  the Polish Parliament for an 
opinion on a draft law establishing specific rules  for the restructuring of loans denominated or indexed to 
a currency other than the Polish zloty . An updated version of the draft law (hereinafter  the ‘draft law’ ) was 
received on 11 July 2016.  
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth  indent of Article 2(1) of Council Decision 98/415/EC1, as 
the draft law contains rules applicable to financial institutions insofar as they materially influence the 
stability of financial institutions and markets . In accordance with the first sentence of Article 17.5 of the 
Rules of Procedure of the European Central Bank, the Governing Council  has adopted this opinion.  
 
1.  Purpose of the draft law  
1.1 The purpose of the draft law is to facilitate the restructuring of loans denominated or indexed in a 
foreign currency (hereinafter ‘foreign currency loans’) that were granted after 1 January 2000  for a 
period exceeding 60 months, even if such loans have been repaid in full or terminated and settled.  
The draft law also prohibits granting of any future loans involving settlement i n a foreign currency.  
1.2 Under the draft law, all borrowers that are consumers or other natural persons are entitled to 
request the restructuring of their loans. Restructuring is subject to the following rules : 
 (i) Any contractual obligation of the borrower denominated in a foreign currency or indexed 
to a foreign currency  is deemed to be null and void;  
 (ii) The principal amount of the loan is the amount in Polish zloty (PLN) actually paid to the 
borrower . Based on the explanatory memorandum, the ECB understands that the 
exchange rate used to convert the principal amount will be the exchange rate applicable 
on the date the amount is paid to the borrower ; 
 (iii) The interest rate on the loan,  which will for each interest period comprise the base rate 
and the margin, is determined based on the following rules: (a) the margin is equal  to the 
level set in the loan agreement but must not be higher than 4  %, (b) the base rate for 
each interest period is  equal to the reference rate of Narodowy Bank Polski (NBP) in 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions ( OJ L 189, 3.7.1998, p. 42) . 
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2 force on the first day of a given period, and (c) the interest rate must not  exceed 30 % of 
the margin set out in the loan agreement for the entire settlement period (before and after 
the restructuring); and  
 (iv) The amount of any fees, commissions, insurance premiums and other costs which the 
borrower is obliged to pay and which are denominated in or indexed to a foreign currency 
is set based on the exchange rate applicable on the date of their payment to the lender.  
1.3 The draft law provides that any loan repayments made prior to the date on which the borrower 
notifies the lender of his/her intention to restructure the  loan will be credited towards the repayment 
of the loan following its restructuring. If the borrower has made repayments in a foreign currency, the amount repaid will be calculated based on the exchange rate used by the bank on the date of 
payment. If the loan was repaid in Swiss francs (CHF), the lender’s purchase rate on that date will 
be used for the purposes of the calculation.  
1.4  According to the draft law , if the total amount of repayments made prior to the date on which the 
borrower notifies the lender of his/her intention to restructure the  loan is lower than the total amount 
of repayments due following the restructuring, the difference between these amounts will  increase 
the borrower’s debt. Conv ersely, if the total amount of repayments is higher, the difference 
between the amounts wi ll reduce the borrower’s debt.  
1.5 Further more, if , following the restructuring, the repayment instalments would be at least 10 % 
higher than the first loan instalment, the borrower may  extend the loan repayment term by the 
period necessary for the loan instalments to no longer exceed the pre- restructuring loan 
instalments by more than 10 %. Any such extension is for a maximum period of  10 years.  
1.6 The draft law also provides that the lender may no t amend any other term of the loan agreement in 
connection with the restructuring.  
1.7  As regards the application procedure, the draft law provides that the borrower may notify the lender of its intention to restructure his /her loan within two years of the entry into force of the draft law. 
Following such notice, the lender will have 30 days to notify the borrower of the following: (i) the 
total amount of loan instalments due in the period between the date on which the loan was granted 
up to the notification date, (ii) the total amount of loan instalments paid by the borrower, (iii) the 
level of the borrower’s debt following the restructuring, (iv) the interest rate on the loan following the 
restructuring and (v) the loan repayment schedule following the restructuring for the next 
12 months. The borrower may apply to have his/her loan restructured within two months of 
receiving the above information from the lender.  If the borrower contests the correctness of the 
information provided by the lender, he/she may within one month request that  the Financial 
Ombudsman, through mediation,  determines the rules for the loan restructuring. Where no 
agreement can be reached following such mediation, the borrower may request that the court  
determines the rules for the loan restructuring.  
1.8 With regard to any  loans that have been repaid in full, the draft law provides that, if the lender’s 
calculation of the loan following the restructuring indicates that the borrower has overpaid an 
amount, the lender must  return any overpayment  to the borrower within 30 days of the borrower’s 
request.  
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3 1.9 With regard to any  loans that have been terminated, within 30 days of  the borrower’s  request, the 
lender must notify the borrower of the information set  out in paragraph 1.7 as well as of the loan 
repayment arrears outstanding on the date the loan was terminated. If requested by the borrower, 
the loan is  restructured and the previous termination of the loan agreement becomes null and void. 
The restructured principal amount of the loan is increased by 1  % of the arrears.  
1.10 The draft law also provides that if the lender has caused the borrower to suffer a loss, he/she must  
remedy such loss or reinstate the state of affairs that existed on the date the loa n agreement was 
entered into.  
1.11 Under the draft law, the borrower is  entitled to refer any doubts concerning mutual settlements and 
terms of the restructuring for verification, determination and assessment by a civil court. The draft 
law prescribes that  the court’s decision must  not include restructuring terms which are worse than 
those included in the information provided by the lender.  
1.12 In addition, the draft law provides that the loan restructuring entitle s the borrower  to apply for the 
removal of  the current mortgage securing the loan and  its replacement by a new mortgage over the 
same real estate for the amount  of the restructured loan plus 20 %. 
1.13 The draft law amends the provisions of the Banking Act of 29 August 2007 by  inserting, among 
other  things, a provision pursuant to which borrowers that are consumers are entitled to discharge 
all of their debt arising from a loan secured by a mortgage over real estate by transferring the 
ownership of the real estate to the lender who is bound to purchase it.  
1.14 Finally, the draft law provides that any bank enforcement titles concerning claims arising under 
loans denominated in or indexed to foreign currencies become void.  
1.15 The draft law is to enter into force after one month following the date of its publication.  
 
2. General observations  
2.1 The ECB notes that it has previously been consulted by the Polish Parliament  and commented on 
a draft proposal , which was not adopted subsequently , dealing with the restructuring of foreign 
currency home loans2. The ECB also understands that various other proposals dealing with the 
conversion of foreign currency loans are currently being discussed by the Polish authorities. The 
current opinion relates only to the draft law submitted to the ECB on 15 June 2016.  
2.2 Prior to the global financial crisis, borrowing in foreign currencies by households and non- financial 
corporations was popular in several Member States3. As previously noted by the ECB4, the lower 
interest rates applicable to foreign currency loans compared to loans in the domestic currency, as 
well as the expectation of domestic currency appreciation, increased the demand for such loans. 
Most of the foreign currency loans in Poland are housing loans denominated in CHF. Foreign 
                                                 
2  See Opinion CON /2015/26.  All ECB opinions are available on the ECB’s website at www.ecb.europa.eu.  
3  For further information on lending in foreign currencies in the Union see the Annex to Recommendation 
ESRB/2011/1 of 21 September 2011 on lending in foreign currencies (OJ C 342, 22.11.2011, p.1).  
4  See paragraph 2.2 of Opinion CON/2014/59, para graph 2.1 of Opinion CON/2015/26 and paragraph 2.1 of Opinion 
CON/2015/32.  
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4 currency housing loans c onstituted approximately 43 % of all outstanding housing loans and 26 % 
of all outstanding loans to households in May 20165. 
 
3. Specific observations  
3.1 Retroactivity  
3.1.1  Acknowledging that Directive 2014/17/EU of the European Parliament and of the Council6 does not 
apply to credit agreements existing before 21 March 2016, as previously noted b y the ECB7, the 
retroactive effect of the draft law does not seem to be in line with the general aim and principle of 
Article 23(5) of Directive 2014/17/EU. This Directive allows  Member States to further regulate 
foreign currency loans, on the condition that such regulation is not applied with retroactive effect.  
3.1.2  As previously noted by the ECB8, introducing measures with retroactive effect could in principle 
undermine legal certainty and might not be in line with the principle of legitimate expectations. It is 
however for the Polish authorities to assess whether the retroactive character of the draft law 
complies with the applicable principles  under Polish law , including the Polish C onstitution . 
3.2 Eligibility criteria  
The ECB notes that the draft law does not prescribe any eligibility criteria for borrowers apply ing for 
loan restructuring other than specifying that borrowers must be consumers or other natural  
persons. As  noted previously9, this raises concerns with regard to the purpose of the draft law. In 
particular, the application of certain targeted eligibility criteria such as, for example, linking the right 
to convert to the borrower’s actual income pos ition or to the loan- to-value (LTV) ratio may be 
appropriate.  
3.3. Effects on the banking sector , financial stability  and Polish economy.  
3.3.1 The ECB reiterates its comments regarding risks associated with foreign currency loans made in a 
previous opinio n10. In particular , in the case of Poland, such risks do not, at present, appear to be 
of a systemic nature for the financial system and are not seen as representing a particular risk from a financial stability perspective.  
3.3.2 The ECB notes that the impl ementation of the draft law is expected to entail financial costs for the 
banking sector.  Whilst the explanatory memorandum does not present a comprehensive 
assessment of the impact of the draft law, the ECB is of the view that t he conversion of foreign 
currency loans at the exchange rate prevailing on the loan origination date, as anticipated by the 
draft law,  may have a significant impact on the financial stability of the Polish banking sector , which  
could result in substantial losses and reduced capital buffers. Banks need to take into account  the 
                                                 
5  See NBP Monetary and financial  statistics  report  at 
http://www.nbp.pl/en/statystyka/czasowe_dwn/nalez_zobow_banki_en.zip.   
6    Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for 
consumers relating to residential immovable property and amending D irectives 2008/48/EC and 2013/36/EU and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34).  
7  See paragraph 3.2 of Opinion CON/2014/59, para graph 2.2 of Opinion CON/2015/26 and paragraph 3.2.1 of Opinion 
CON/2015/32.  
8  See paragraph 3.2.2 of Opinio n CON/2015/32.  
9  See paragraph 3.3 of Opinion CON/2015/32.  
10   See paragraphs  3.3.1 and 3.3.2 of Opinion CON/2015/26.  
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5 direct cost s of conversion as well as any costs relating to the closing of currency positions  due to 
the unwinding of existing hedges and refinancing. This would reduce the resilience of the financial 
sector to adverse shock  and may have a further negati ve impact on the Polish economy,  in 
particular due to the possibility of a strong depreciation of the PLN11. 
3.3.3 The draft law may also have some negative effects on the Polish economy if it leads to a 
deteriorat ion in foreign investor sentiment due to a perceived increase in legal uncertainty and 
country risk.  
3.3.4 In addition, the ECB notes that the proposed interest rate for the restructured loans , which is to be 
composed of NBP’s current reference interest rate and a restricted margin,  is substantially below 
the usual pricing of collateralised, long- term non- mortgage loans , and could therefore have a 
further negative impact on the future profitability of the affected banks.  
3.3.5 Whilst the conversion of foreign currency loans should reduce part of the currency mismatches in 
households’ balance sheets , which could provide relief for distressed foreign currency borrowers 
and contribute to reducing the credit risk of banks in the longer  term, the potential overa ll negative  
impact of the draft law on the financial stability of the Polish banking sector  and the future lending 
capacity of certain institutions may be significant , thus resulting in overall negative effects on the 
Polish economy . 
3.3.6 Consequently, th e ECB suggests that the Polish authorities carry out a thorough analysis as to 
whether the envisaged retroactive measures could have negative effect s on the banking sector and 
the overall economy  in Poland , in particular  on the sound capital base and the i nternal capital 
adequacy assessment processes of the affected institutions, including cross -border effects on the 
consolidated profits of international banking groups, potentially leading to increased write- down 
requirements . With regard to any potential negative effects of such measures, the ECB remains of 
the opinion that, when introducing provisions in relation to settling and converting foreign currency 
loans, due consideration should always be given to fair burden sharing among all stakeholders, 
thus a lso avoiding moral hazard in the future12. 
3.3.7 From a banking supervisory perspective, as previously noted by the ECB13, the restructuring of the 
foreign currency loans , as proposed by the draft law , does not eliminate all risks relating to such 
loans, in particular interest rate risks.  
3.8 Miscellaneous  
3.8.1 The ECB notes that the draft law contains provisions that are unclear, or may be interpreted very 
broadly and therefore give rise to legal uncertainty.  For example, it is difficult to reconcile how t he 
interest rate on the loan would comprise a base rate equal to the NBP reference rate and margin 
equal to the level set in the loan agreement (not higher than 4 %) with the specification that the 
interest rate must not exceed 30 % of the margin set out in the loan agreement for the entire 
settlement period (before and after the restructuring). Also , in the provision which requires the 
                                                 
11 Risks associated with blanket currency conversion of foreign exchange loans at the exchange rate prevailing on the 
loan origination have been discussed  and analysed by the National Bank of Poland in the Financial Stability Review 
July 2015. See http://www.nbp.pl/en/systemfinansowy/fsr201507.pdf , Box 2 on p.  39-41.   
12  See paragraph 3.4 of CON/2014/59 and paragraph 3.3 of  CON/2014/87.   
13   See paragraph 3.2.3 of CON/2015/26.  
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6 lender to remedy ‘any loss ’ incurred by the borrower  it is not clear what is meant by a loss on the 
part of the borrower and what kind of liabilities might arise for lenders as a result of this provision .  
3.8.2 The ECB also notes that  the draft law prescribes that if the borrower  refers his/her  doubts 
concerning mutual settlements and the terms of the restructuring for verifi cation, determination and 
assessment by a civil court , the court’s decision must not include restructuring terms which are 
worse than those included in the information provided by the lender.  It might  be useful to clarify 
more precisely what is intended by  this provision . 
3.8.3 Finally, the ECB notes that a temporary relief programme funded by the banks has recently been 
set up in Poland to assist borrowers in a difficult financial situation in meeting their foreign currency 
loan obligations. The Polish aut horities might consider  analysing  the impact of this  programme 
before introducing other measures  dealing with foreign currency loans . 
 
This opinion will be published on the ECB’s website.  
  Done at Frankfurt am Main, 29 July 2016.  
 [signed]  
 
The President of the ECB  
Mario DRAGHI