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Commerzbank may need to keep Swiss franc mortgages if exits mBank - Polish regulator

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By Reuters
Commerzbank may need to keep Swiss franc mortgages if exits mBank - Polish regulator
FILE PHOTO: A Commerzbank logo is pictured before the bank's annual news conference in Frankfurt, Germany, February 9, 2017. REUTERS/Ralph Orlowski   -   Copyright  Ralph Orlowski(Reuters)

WARSAW (Reuters) – Commerzbank <CBKG.DE> may have to keep the Swiss franc mortgage portfolio of mBank <MBK.WA> when it disposes of its stake in the Polish bank, Poland’s market regulator KNF said on Wednesday.

“It is natural for the supervisor to expect that an entity intending to leave the Polish market will properly secure both the financing of the portfolio of foreign currency loans and the legal position of borrowers,” KNF head Jacek Jastrzebski said in an email to Reuters.

Commerzbank said last week it aims to sell a stake in mBank, in which it has a 69.3% holding worth about $2.56 billion. Germany’s second-largest lender, which is partly owned by the government after a bailout, is struggling to make a profit.

Analysts have said that they would expect KNF would require Commerzbank to sell mBank without a portfolio of mortgages totalling around 3.7 billion Swiss francs (£3.02 billion) as the regulator did in previous such transactions.

Poland’s problem with Swiss franc mortgages dates back to the early 2000s when people took out loans denominated in the Swiss currency, attracted by interest rates far below those available in Polish zloty.

But a rise in the value of the Swiss franc has meant many Polish borrowers are having to pay far more than they expected, leading some to take their banks to court over the loans.

Jastrzebski said that he expects Commerzbank would consult KNF about a sale of its mBank stake.

(Reporting by Marcin Goclowski; Writing by Agnieszka Barteczko; Editing by Alexander Smith)