EN ECB -PUBLIC  
 
OPIN ION OF THE EUROPEAN CENTRAL BANK   
of 9 November  2017  
on support to home loan borrowers in a difficult financial situation and support for the voluntary 
restructuring of home loans denominated or indexed in a foreign currency  
(CON/2017/ 48) 
 
Introduction and legal basis  
On 21  August 2017 the European Central Bank (ECB) received a request from the Polish Parliament for 
an opinion on a draft law amending the law on support to home loan borrowers in a difficult financial 
situation and amending the law on corporate income tax  (hereinafter the ‘draft law’).  
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 Un ion and the sixth indent of Article 2(1) of Council Decision 98/415/EC1, as 
the draft law relates to rules applicable to financial institutions in so far as they materially influence the 
stability of financial institutions and markets. In accordance with t he 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 law of 9 October 2015 on support to home loan borrowers in a difficult financial situation2 
specifies the rules for granting and the conditions of  use f or repayable financial aid for natural 
persons in financial difficulties with a home loan (hereinafter ‘financial aid’ ). Financial aid is 
provided through a State -owned bank, Bank Gospodarstwa Krajowego (BGK) . The law covers any 
home loans that are secured by a mortgage arrangement, regardless of the currency in which they 
were granted.  
1.2 The main purpose of the draft law is  to (1) change the mechanism for providing financial support to 
those borrowers who find themselves in a difficult financial situation and are also required to repay 
instalments  on a home loan that represents  a significant burden on their household budgets and 
(2) introduce a new instrument to facilitate the voluntary restructuring of loans denominated in or 
indexed to a foreign currency.  
1.3 The draft law extends the scope of the law on support to borrowers in a difficult financial situation 
by introducing rules for granting a loan (hereinafter the 'repayment loan') to pay back the remaining 
part of the home loan and by specifying the conditions of use for the repayment loan if the amount 
obtained from the sale of the property fails to cover the entire obligation. Furthermore, the draft law 
modifies the criteria for granting financial aid and defines criteria for granting repayment loans . 
                                                      
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).  
2  Published in Dziennik Ustaw (Dz. U.) of 2015, item 1925.  
ECB -PUBLIC  
2 Under the draft law financial aid or repayment loan s may be granted if (1) when applying for 
financial aid or a repayment loan at least one of the borrowers is an unemployed person; or (2) the 
proportion of the borrower's expenses allocated to paying  monthly instalments of principal and 
interest on a home loan exceeds 50 % of the borrower’s household income; or (3) the monthly 
household income minus any monthly costs related to the home loan is lower than Polish zlotys 
(PLN) 1268 for a single -person household or PLN 1028 per person for a multi- person household 
(these amounts are subject to adjust ment  every three years ), which is twice the amount of the 
current thresholds3. 
1.4 The draft law extends  the duration of financial aid from 18 to 36 months and increases  the 
maximum amount of financial aid from PLN 1 500 to PLN 2 000 per month, up to a maximum of 
PLN 72 000 over 3 years. Also,  the new support in the form of a repayment loan may not be higher 
than PLN 72 000. For home loans that should be repaid in foreign currency BGK will transfer the 
repayment loan in the currenc y in which the home loan is repaid, at the selling rate of exchange 
published by Narodowy Bank Polski  (NBP) on the day preceding the transfer of the repayment 
loan.  
1.5 The draft law introduces an appeal procedure against a creditor's decision to reject a borrower's 
application for support  (financial aid and/or a repayment loan) . If the borrower  is found to compl y 
with the criteria for granting financial aid or a repayment loan, the creditor must  pay the financial 
aid which w ould have been paid during the a ppeal period,  or 8.33 % of the total amount of the 
repayment loan , from its own funds .  
1.6 The draft law facilitates the provision of financial support related to the voluntary restructuring of 
home loans denominated in or indexed to a currency other than the currency of the borrower's 
income, by specifying that such loans may be voluntarily converted into home loans denominated 
in the currency  of borrower’s income. This financial  support aims  to cover the difference between 
the carrying (balance sheet) amount  of the pre- restructuring debt , calculated according to the 
average exchange rate published by NBP,  and the carrying amount of the post -restructuring debt. 
Such  support would be granted to the creditor , who  would be responsible for offering the borrower 
adequate restructuring terms and obtaining the borrower's consent. The creditor may apply for 
funds intended for voluntary restructuring up to the amount of the quarterly contribution made by 
the creditor to the r estructuring fund. Such funds may only be used by the creditor for any voluntary 
restructuring agreements concluded  within six months of the end of the quarter in which the 
contribution was made. If the creditor fails to fulfil their responsibilities , or if the creditor and the 
borrower fail to reach agreement, the funds will not be granted to the creditor , instead they  will be 
divided among all other creditors contributing to a restructuring fund established under the draft law 
for a given period and in proportion to the contributions made. Komisja Nadzoru Finansowego 
(KNF, The Financial Supervisory Authority) may issue recommendations for creditors, which set 
forth rules determining the sequence of voluntary restructuring of the pre- restructuring debt, taking 
                                                      
3  See Article 3(1)(3) of the Law on support to home loan borr owers in a difficult financial situation in connection with 
Article 8 Section 1 of the Law of 12 March 2004 on social assistance (Dz. U. of 2016, item 930) and Regulation of 
the Council of Ministers of 14 July 2015 on the verification of income criteria and the amount of social assistance 
(Dz. U. of 2015, item 1058).  
ECB -PUBLIC  
3 into account the stability of the financial system and the efficient allocation of funds made available 
for this purpose . 
1.7 Under the draft law financial support would be financed by a supporting fund and a restructuring 
fund, both of which would form part of a support fund for b orrowers managed by BGK.  The 
supporting fund would be used to make financial aid  payments and disburse repayment loans , 
while the restructuring fund would be used to support the voluntary restructur ing of foreign currency 
denominated or indexed home loans. The supporting fund will be financed by (i) quarterly 
contributions from creditors in proportion to the portfolio of home loans whose principal or interest 
have been outstanding for more than 90 days , (ii) reimbursement of financial aid or repaym ent 
loans by borrowers and (iii) income from the investment  of funds from the supporting fund. 
Quarterly contributions made by creditors to the s upporting fund may not exceed 1  % of the 
carrying amount of the portfolio of home loans referred to above. The restructuring fund will be 
financed by (i) , quarterly contributions from  creditors in proportion to the portfolio of home loans 
denominated or indexed in a foreign currency  and (ii) income from the investment of  funds from  the 
restructuring fund. Quarterly contributions made by creditors to the r estructuring fund may not 
exceed 0.5 % of the carrying amount of the portfolio of home loans denominated or indexed in a 
currency other than the currency of the borrower’s income.  
1.8 Under the provisions of the draft law, quarterly  contribut ions to the s upporting and restructuring 
funds  will be set by the Council of the s upport fund for b orrowers on the basis of the opinion of the  
Polish  Financial Stability Committee4, acting  in its macroprudential function.  In exceptional cases, 
the Council may, at the request of a creditor, consent to the contributions being paid in instalments.  
The Council may, with the consent of the Minister competent for financial institutions,  temporarily 
suspend a creditor’s obligation to contribute to the supporting fund if the s upporting fund has 
sufficient  funds . Following the consultation of the Financial Stability Committee , acting in its 
macroprudential function, the M inister competent for financial institutions may suspend 
contributions to the s upporting and r estructuring funds  in order to ensure the stability  of the 
financial sector.  
1.9 Under t he draft law persons receiving financial support  must  start to repay the funds received, at 
the latest,  in the month following the month that marks two years since either the last tranche of 
financial aid  was paid out  or the disbursement date of the repayment loan.  The funds are to be 
repaid in 144 equal, interest -free, monthly instalments . If the borrower repays 100 instalments 
without any delay the remaining 44 insta lments will be cancelled.  
 
                                                      
4  The Financial Stability Committee was established by the Law of 7 November 2008 ( Dz. U. of 2008 No 209, 
item 1317). The functioning of the Financial Stability Committee, which is the compete nt authority for macro-
prudential supervision and crisis management, is currently governed by the Law of 5 August 2015 on the macro-
prudential oversight of the financial system and crisis management in the financial system (Dz. U. of 2015, 
item 1513).  
ECB -PUBLIC  
4 2. General observations  
2.1 Prior  to the global financial crisis, borrowing in foreign currencies by households and non- financial 
corporations was popular in several Member States5. As previously noted by the ECB6, the lower 
interest rates applicable to foreign currency loans compared to loans in domestic currenc ies, as 
well as the expectation that domestic currenc ies might appreciat e, increased the demand for such 
loans. The ECB understands that most of the foreign curr ency loans in Poland are home loans 
denominated in Swiss francs and that foreign currency home loans constituted approximately 
36.4 % of all outstanding home loans and 21 % of all outstanding loans to households in 
July 20177. 
2.2 The ECB has previously been consulted by the Polish Parliament and issued opinions on three  
draft l egislative proposals, which were subsequently not adopted, dealing with the restructuring of 
foreign currency loans8. However, the ECB notes that the draft law contains provisions app lying not 
only to foreign currency loans, but also to home loans regardless of the currency in which they 
were granted.  
 
3. Specific observations  
Effects on the banking sector, financial stability and the Polish economy  
3.1 The ECB has pointed out on several occasions the risks associated with foreign currency loans9, 
and referred to the analysis of such risks by the European Systemic Risk Board (ESRB) and the 
ESRB’s  recommendations for addressing them in Recommendation ESRB/2011/1. The ECB also 
notes that KNF  took into account the ESRB ’s recommendations when issuing its  Recommendation 
S10 pursuant to which banks are recommended to ensure that future mortgage loans to retail 
borrowers are granted in the currency of the borrower’s income.  
3.2 The ECB would repeat  its past comments regarding the risks associated with foreign currency 
loans11. Nevertheless, 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 regarded as representing a particular risk from 
a financial stability perspective.  
3.3 The ECB notes that the draft law may have a considerable impact on the profitability of the Polish 
banking sector , particularly when  the quarterly contributions to both funds are set at their maximum 
level. In such a case, contributions could reduce the profits of the banking sector by up to 20 % of 
the current total pre- tax operating profit s. Although the resulting financial impact appears 
manageable at the aggregate level, it could reduce the Polish banking sector ’s capacity  to provide 
                                                      
5  For further information on lending in foreign currencies in the Union, see the Annex to the Recommendation of the 
European Systemic Risk Board of 21 September 2011 on lending in foreign currencies (ESRB/2011/1) (OJ C 342, 
22.11.2011, p. 1).  
6  See for example, paragraph 2.1 of Opinion CON/2017/9. All ECB opinions are available on the ECB’s website at 
www.ecb.europa.eu.  
7  See Narodowy Bank Polski’s report on monetary and financial statistics, available at www.nbp.pl.  
8  See Opinions CON/2015/26, CON/2016/39 and CON/2016/50.  
9  See, for example, the ECB’s June 2010 Financial Stability Review, available on the ECB’s website at 
www.ecb.europa.eu, and paragraph 3.3 of Opinion CON/2016/50.  
10  Recommendation S on good practices wi th regard to management of credit exposures that finance property and are 
mortgage secured, available on the KNF’s website at www.knf.gov.pl . 
11  See paragraphs 3.3.1 and 3.3.2 of Opinion CON/2015/26 and paragraph 3.3.1 of Opinion CON/2016/39.  
ECB -PUBLIC  
5 credit. The impact may al so be unevenly distributed across the sector, with  banks holding large 
portfolios of foreign currency loans  being particularly affected. Against this background, the ECB 
notes that the draft law include s neither a limit on the size of the restructuring and the supporting  
fund, nor a time limit on the contributions . Thus, the financial impact of the draft law is likely to be of 
a recurring nature, subject only to the discretion of the Council of the support fund for borrowers 
and, ultimately, of the Minister  of Finance. This marks a material change from the previous 
scheme , which was initially set at PLN 600 million with a possibility f or further increases if needed 
and for which the cut -off date for borrowers’ application submissions was 31 December 2018.  
3.4 The draft law may also have some negative effects on the Polish economy if it leads to a 
deterioration in foreign investor sentiment due to a perceived increase in legal uncertainty and 
country risk.  These effects may be aggravated if, in parallel, the Pol ish authorities implement 
further measures related to foreign currency lending that are currently under discussion.   
3.5 The ECB also notes the considerable expansion of the perimeter of households eligible for 
financial support under the draft law. The draft law doubles the amount of the maximum per capita 
income threshold, below which a household is eligible to receive financial support. This may enable 
some households , which are not in financial distress , to take advantage of both the zero interest 
rate appl icable to the repayments of the financial aid and the debt write- off mechanism provided for 
in the law. This may lead to moral hazard and put an undue financial burden on the s upporting 
fund. 
3.6 Consequently, the ECB encourages the Polish authorities to carry  out a thorough analysis to better 
quantify the financial stability implications of the draft law, in particular as regards whether the 
proposed measures could have negative effects on credit institutions taken individually, the 
banking sector as a whole and the overall economy in Poland. In particular, due consideration 
should be given to the capital adequacy of the affected i nstitutions and any cross -border effects on 
the consolidated profits of international banking groups.  The Polish authorities are also invited to 
assess the risks that the draft law might introduce moral hazard and weaken the repayment 
discipline of eligible borrowers.   
Legal certainty  
3.7 The ECB notes that the draft law does not make it fully clear what constitutes a failure to reach an 
agreement for which the creditor can be made responsible, even though the failure to conclude 
voluntary restructuring agreements within the six -month period, following the date of the quarterly 
contribution payment , means that the creditor will not be entitled to receive financial support from 
the restructuring fund and recoup his quarterly contribution to the fund.  
 
This opinion will be published on the ECB’s website.  
 
Done at Frankfurt am Main, 9  November  2017.  
 
[signed] 
 
The President of the ECB  
Mario DRAGHI