The court is specifically interested in calculations used by the Warsaw Interbank Offered Rate Index (WIBOR) in setting mortgage interest rates in Poland after borrowers began taking their banks to court.
Currently, Polish courts are dealing with 1,221 cases where borrowers have accused their mortgage lenders of deliberately upping the WIBOR rates to their detriment.
A study released by Deloitte last week shows Poland has the highest mortgage rates in the EU, with customers paying an average of 8.08%.
Czechs by comparison, pay 5.9%, and Croatians, who are now part of the eurozone, pay an average of 3.26%.
Poland’s Deputy Minister Finance Jurand Drop said on Monday: “We are to submit the government's opinion to the Court of Justice of the European Union (CJEU) by 28 October.
“We are in contact with the European Commission, because the CJEU judgments are binding on all member states.
“All of Europe is therefore interested in the response being based on the correct interpretation of the situation.”
He added: “The value of all financial instruments based on the WIBOR index is approximately €2.1 trillion. Our entire economy is based on it.”
What is WIBOR?
The equivalent of the London Interbank rate (LIBOR), and the EURIBOR index used in the eurozone, the WIBOR is based on the interest rates which a panel of Polish banks offer to deposit money at another bank.
GPW Benchmark, a subsidiary of the Warsaw Stock Exchange, collects the interest rate declarations of the banks. The WIBOR which they announce each day is an average of at least seven banks’ daily data.
If GPW Benchmark receives more than seven values, the top and bottom outliers are excluded in order to produce a more reliable average.
A drop in the ocean
The Polish Bank Association is confident that WIBOR will be upheld as being compliant with European directives.
Referring to the ongoing court cases, Chairman of the Polish Bank Association Tadeusz Bielak said: “We have almost 2.4 million active mortgage loans, 1,200 WIBOR cases is a drop in the ocean.
“No one has proven that the WIBOR rate is not transparent and manipulated.”
Were the ruling to go against banks, and there was a repeat of the losses that were incurred when the CJEU ruled against foreign currency loans, then banks would have to make significant reserves to cover the fallout.
The online TV channel OF TV reported that between 2016 and 2022 banks had to set aside 16.3 billion euros in reserves to cover potential losses after the CJEU ruling on foreign currency loans.
