The incessant growth of WIBOR has become a huge problem for PLN borrowers, who are increasingly questioning the methodology for determining the value of this index. However, there is help in sight as the government is planning to assist, although the initial proposals were contrary to EU law.
A draft bill on crowdfunding for business projects and assistance to borrowers has recently been submitted to the Sejm, i.e. the lower house of the Parliament.
The bill has been supplemented with proposed regulations on borrower protection, as recently announced by the Prime Minister during the European Economic Congress in Katowice.
In contrast to the earlier proposals presented in the media by representatives of the ruling camp, the draft legislation appears to be rooted in the EU BMR.
What is no longer in the bill?
The proposed bill no longer stipulates that the WIBOR substitute would apply only to residential mortgage loans, while WIBOR or another benchmark would be used for other loan agreements (and thus also for loans to businesses).
Such a solution would be contrary to the BMR, in accordance with which the new benchmark will replace, by operation of law, any reference to the replaced benchmark in all types of agreements and instruments listed in the Regulation. Therefore, it is not possible to provide that the replacement will apply only to certain types of agreements.
However, apparently, the idea of having different benchmarks for housing loans and for other loans has not been taken off the table. Indeed, it has reappeared in a recent statement by the Deputy Finance Minister as a proposal for a voluntary commitment by the banking sector to offer “housing borrowers” a more favourable alternative benchmark.
Another issue raising doubts as to its compliance with the BMR is the idea of the so-called “extinction” of WIBOR, according to which WIBOR would still be applicable for a certain period of time and only in certain types of agreements.
Such solution seems to contradict the BMR not only for the reasons mentioned above, but also as the BMR obligatorily links the replacement of a critical benchmark with a complete discontinuation of the calculation of the replaced benchmark, i.e. in this case WIBOR.
This idea is not explicitly included in the draft legislation, however the bill does leave the door open for it to be implemented at a later stage.
This has been done by replacing the word “date” with the words “date or dates” in a key provision of the bill, which is supposed to enable a decision to be taken in the future on whether the idea of extinguishing WIBOR should be implemented and whether such a solution is compatible with EU law.
Disputes over WIBOR
Another aspect of the proposed statutory changes is their potential impact on so-called WIBOR lawsuits.
In these lawsuits, borrowers question whether banks are correctly using WIBOR as the benchmark for calculating interest rates on residential mortgage loans.
It is at the very least questionable whether a benchmark introduced by the government to protect the interests of borrowers can be successfully challenged, while borrowers claims may certainly refer to the period when WIBOR was used to calculate interest on their loans. But will these claims be upheld by the courts?
Banks were given an excellent argument against the validity of these claims by the Deputy Minister of Finance himself, who noted that the difference between WIBOR and other indices had only increased substantially in recent months, whereas before it had not been significant.
As the Deputy Minister argued, it is thanks to this that the so-called adjustment spread being applied in accordance with the BMR (the value of which is set by the Minister of Finance and whose purpose will be to ensure that WIBOR is comparable to the new benchmark), will not be high, so it will adjust the new index upwards only to a small extent.
This is because the spread will be determined by comparing WIBOR and the replacing index over the last, for example, five years rather than several months, and over such time the two indices would be similar.
However, as the new “fair” benchmark introduced by the government and the KNF will show no significant difference compared to the “unfair” WIBOR over the last few years, it may be difficult for borrowers to justify that WIBOR was significantly inflated over the long term.
By Konrad Werner, Partner, Kochanski & Partners