Polish banks were dealt a major blow in the Swiss franc mortgage case on Thursday after the European Court of Justice’s advocate general said banks could not pass on additional fees to customers whose rates were found to be incorrect, Bloomberg reported.

Decision of the CJEUPhoto: Torsten Sukrow/SULUPRESS.DE / AFP / Profimedia

“After the termination of the mortgage loan contract due to some abuses, consumers can present claims to banks that exceed the financial benefit compensation. Banks don’t have that option,” says Attorney General Michael Collins.

The opinions of the Advocate General are not binding on the Court of Justice of the EU, even if in most cases the judges of the Court of Justice of the EU tend to follow the opinion of the Advocate General. Usually, the final decision of the Court of Justice of the EU is taken six months after the opinion of the Advocate General.

Immediately after this announcement, the index regrouping shares of Polish banks (WIG Banks) recorded a drop of 3.2%.

Poland’s Financial Supervisory Authority (KNF) has already warned that the Polish banking sector could be hit with 100 billion zlotys ($22 billion) in the event of an unfavorable CJEU ruling.

“The general counsel’s opinion is negative for banks,” said Kamil Stolyarski, an analyst at Santander BM.

However, the final decision may not be so favorable for consumers, according to the Association representing the interests of Polish banks ZBP. It stressed that the key question is whether the CJEU will allow Polish judges to assess whether banks can sue borrowers to recover lost interest and fees under Polish law.

Polish banks are still facing legal challenges over about $12 billion in outstanding Swiss franc mortgages. In 2021, a court in Warsaw requested an opinion from the CJEU on whether banks can continue to sue customers for overpayments. This was a way for the banking industry to recoup lost interest and fees and prevent new lawsuits since the banks had already lost most of the lawsuits.

Polish banks have converted thousands of foreign currency mortgages into zlotys through agreements with clients to reduce exposure. A historic ruling by the European Court of Justice in 2019 cleared the way for voiding contracts containing unfair terms, and since then the Polish banking industry has set aside more than PLN 37 billion in provisions for losses. (Source: Agerpres)