Dorota Krupa

Foreign Currency Loans in Poland and Hungary – A Comparative Analysis

Foreign currency loans (FCL) have been commonly used in many developing countries in Europe since 2005-2006. In particular, they were granted to retail clients to finance purchasing of real estate. As interest rates in many Central and Eastern European countries were permanently higher than in Switzerland and the Eurozone, the domestic as well as foreign owned banks had started to sell mortgages in foreign currencies, predominately in Swiss francs and euros. Due to reduced interest such loans turned out to be substantially cheaper and easier to get than loans denominated in domestic currencies. In fact within 2-3 years they gained a substantial and in some cases dominant share in domestic credit markets of CEE. Because repayment of FCL is strictly dependent on the exchange rate of foreign currencies, the considered loans had exposed a large group of domestic borrowers to fx risk which they could not effectively hedge. Such risk became very serious in countries like Poland and Hungary with a clear floating exchange rate regime and substantial share of FCL among bank assets. As far back as 2008, and then in 2011 the fx risk related to such loans strongly materialised due to an unexpected rise of the valuation of the CHF and to a lesser extent the EUR. The goal of this paper is to present the phenomenon of using foreign currency loans in Poland and Hungary for purchasing real estate where such loans concentrate a substantial share of banking assets. The authors will present the nature, conditions and premises of taking such loans and will use a comparative analysis between Poland and Hungary. The paper will also contain an analysis of the influence of such loans on borrowers, banking sectors and systemic risk in both countries. The authors will provide statistical analysis of the exchange rate of PLN and HUF to present the potential of fx risk of FCL. Finally the paper will describe legal and financial supervision solutions applied in both countries to diminish the risks related to the loans.

Securitisation Funds in Poland in Investment Fund Companies’ Perspective

The main objective of the paper is identification and characteristics of a new research area that combines collective investment schemes and process of securitisation. In the paper we provide a descriptive analysis of securitisation investment funds in Poland and consider their role in the process of securitisation. We also identify major issues related to the development of the securitisation and securitisation funds market. The paper contains considerations related to the potential and to the direction of the securitisation funds development in Poland. In the paper we used critical analysis of legal solutions in Poland, as well as statistical data analysis. The work is based on statistical data of the domestic market of investment funds from The Chamber of Fund and Asset Management. The background for the analysis is the results of the original research prepared and conducted by the authors. The questionnaire was directed at management boards of nineteen Investment Fund Companies, which manage securitisation investment funds in Poland.At present a share of securitisation funds in the investment funds market in Poland isn’t large, however it is very quickly increasing. We can observe that the development of the securitisation fund market is intense. Despite this, the participation of investment funds in the process of securitisation is still in an early stage in Poland, however its influence on the future development of securitisation is considered as high. In Poland, Investment Fund Companies systematically increase the offer of securitisation funds by creating funds directed to individual investors (non-dedicated). Investment certificates of non-dedicated securitisation funds may encourage individual investors to diversify their investment portfolios. The potential development of the domestic market of securitisation funds is related to the legal and tax aspects of securitisation in Poland and the efficient cooperation between entities in the securitisation process.

Saving preferences of households in Poland

The purpose of this article is to present the savings’ preferences of households in Poland. Households in Poland invest primarily in deposits made in Polish zloties. Their primary motivation is saving for flats and houses and in the second motivation is saving for durable goods. For the purpose of the analysis authors used the data published by National Bank of Poland and statistical data published in the Social Diagnosis 2011 report.