Swiss franc surge may hit Polish banks: Moody's

[WARSAW] Moody's Investors Service said on Monday the Swiss franc surge may negatively affect Polish banks, saying General Electric's Polish unit BPH, Bcp's Millennium, Commerzbank's mBank, and Getin Noble were most vulnerable.

"If sustained, this devaluation of the Polish currency relative to the Swiss franc would be credit negative for Polish banks, because it increases the cost of instalments for borrowers of Swiss francs," Moody's said.

The unfavourable currency movement also creates liquidity needs with respect to collateral requirements for banks that use derivatives to cover their Swiss franc funding mismatches.

These risks are more pronounced for banks with higher concentrations of Swiss franc mortgage loans.

"Such rated banks include Bank BPH (Baa3 review for downgrade, D/ba2 review for downgrade), Bank Millennium (Ba2 negative, E+/b1 stable), mBank (Baa3 negative, D/ba2 stable) and Getin Noble Bank (Ba2 negative, D-/ba3 negative)," Moody's said.

REUTERS