The final decision of the Court of Justice of the European Union (CJEU) in Case C-520/21, which basically exempts the consumer from the cost of capital being provided to them by a bank for many years, has a negative effect for the banking sector and the whole economy of Poland but also in the light of legal certainty, public interest and the basic principles of social justice, as it grants preferential treatment to a small group of borrowers in the form of ‘a free loan’. In the opinion of the UKNF, the decision of the CJEU contradicts the principles of proportionality and balance between protection of the values protected under Directive 93/13/EEC and the overriding values such as stability and safety of the financial system. It also goes beyond what could be required by the principle of effectiveness applied in relation to Directive 93/13/EEC. 

In the opinion of the UKNF, the Polish banking sector is now well-capitalised and characterised by adequate liquidity, thus being secure and stable. Banks have recently accumulated an appropriate buffer to increase their resilience and capacity of absorbing the costs related to the unfavourable decision of the CJEU.  However, the erosion of banks’ capital, which will take place following the decision, is bound to have a negative impact on the banks’ capacity of further financing the housing needs of Polish households and the whole economy, including the planned projects in the field of energy transition or plans to participate in the reconstruction of Ukraine for which the banking sector could be a natural partner.

The UKNF expects banks to take account of the decision of the CJEU in their models of creating provisions for legal risk related to foreign-currency mortgage loans. The supervisory authority also still expects banks to adopt an active approach to the systemic solving of the problem of foreign-currency housing loans by offering their customers settlement agreements, whose essence is the proposal made by the Chair of the KNF Board in December 2020 to convert the CHF loans into PLN loans so that a CHF loan is treated in the same manner as if it had originally been a PLN loan. According to the UKNF, from the customers’ point of view, financial settlement is the most attractive and reasonable alternative to the costly and lengthy litigation.