Michał Buszko

Foreign currency housing loans and exchange rates – risk evaluation

The aim of this paper is an evaluation of foreign exchange housing loans granted in Poland. In the paper, there was conducted research of portfolio of housing loans, its structure and changes, especially with consideration to the currency of debts. Also, a foreign currency loans profitability accordingly to the time of obtaining the loan by the debtor was analyzed. The author statistically analyzed volatility of foreign exchange rates of major currencies traded in Poland. The results were compared versus swiss franc and euro. The research indicated very high level of swiss franc volatility and risk as well as confirmed high level of risk of financing in swiss currency over euro.

Profits and Risks of Foreign Exchange Mortgage Loans: Case of Poland

This paper describes phenomenon of using of foreign currency mortgage loans for housing purposes in Poland. Such phenomenon appeared also in other developing countries of CEE (e.g., Hungary, Romania, Croatia, Serbia, Bulgaria) but at different scale, scope and consequences. The aim of this paper is to present the major issues of foreign currency mortgage loans in Poland, the conditions and reasons of their spreading, their relative benefits and costs and characteristics of risk created by such loans for whole banking system in Poland. In the paper, the author will enclose the results of data analysis for Polish financial system, mortgage loans market, as well as foreign exchange rates. The paper will contain also the author’s analysis of effectiveness of repayment of fx mortgage loans (CHF and EUR) in Poland versus PLN loans. The results of the author’s research in general demonstrate that foreign exchange mortgages benefits depends primarily on the exchange rate on the date of taking the loan. The main conclusion from the research is that foreign currency mortgage loans are relatively beneficial but they create significant potential risk to the economic safety of the Polish households as well as whole banking system.

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.

Investments in stock of banks implementing high social responsibility standards listed on the Warsaw Stock Exchange

The paper characterizes benefits and evaluates profitability of investments in stock of banks participating in RESPECT Index, i.e. a special index distinguishing companies that implement high standards of corporate social responsibility. In the paper, there is a brief characteristics of RESPECT Index, its nature, goals and ways of functioning. After that, there are presented base statistics of investors’ return and risk related to the RESPECT Index. In the next part the author describes banks listed on WSE in Poland and their role in RESPECT Index. Further, there are included rates of return from investments in socially responsible banks versus WIG Banking index. The last part of the paper is related to analysis of the bank stock prices around the day of their entrance to RESPECT Index and their cumulative returns since listing within the Index on WSE.

Swiss franc mortgage loans – a threat or source of benefits to borrowers?

This paper relates to issues of hazard, risk and financial benefits generated by currency mortgage loans in Swiss franc granted in Poland. In particular, the paper focuses on situation of borrowers, especially describing hazards and financial benefits against financing in Polish currency. In the paper, the author presents in details the nature and role of currency mortgage loans in banking sector, as well as characterizes risk types burdening banks and borrowers of CHF loans. Also, the author prepared a comparative model of repayment of mortgage loans as well as investigated financial benefits obtained by Swiss franc borrowers in period 2006–2009 against Polish zloty borrowers.

Supporting of Swiss Franc Borrowers and Sustainability of the Banking Sector in Poland

Until 2009 Swiss franc loans gained substantial share among all mortgages in Poland and have created systemic risk. After the crisis and strong revaluation of Swiss currency, the borrowers started to suffer an increased value of installments as well as a high value of debt. Due to that fact, there were proposed various solutions, mostly legal and financial, to reduce the costs and risks related to foreign currency lending to unhedged borrowers in Poland.