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(Bloomberg) -- Polish Finance Minister Mateusz Szczurek is nudging banks to abide by a pain-sharing agreement to help borrowers with $35 billion in Swiss-franc home loans or face pressure for more sweeping measures that may inflict losses.

Banks should maintain the balance or “symmetry” in loan contracts, in which they accept interest-rate risks, while the client is exposed to currency swings. That includes “isolated” cases of borrowers who should now be paying negative interest on their loans after the Swiss National Bank last week lowered its target rate to minus 0.75 percent, he said.

“I strongly encourage banks at this stage not to break this symmetry,” Szczurek said in an interview Thursday in Davos, Switzerland. “Otherwise, the political pressure, the social pressure to change the model toward Serb, Croat or Hungarian solutions will be greater.”

Bank executives met with Szczurek, central bank Governor Marek Belka and financial regulators on Tuesday and agreed to ease the impact of a surging franc by passing on negative interest rates in Switzerland to mortgage holders. Polish measures stopped short of Hungarian Prime Minister Viktor Orban’s move last year to order banks to convert $14 billion of foreign-currency loans into forint.

Romania is considering a proposal to convert franc loans at a discounted rate while Croatia moved to force banks to absorb exchange-rate losses for the next 12 months.

While Polish banks agreed to take into account negative Swiss rates in calculate interest on their franc loans, they’ve balked at taking them below zero.

‘Philosophical Question’

Rates must be at least zero percent, Getin Noble Bank SA said on Wednesday. What happens if the cost of credit becomes negative “remains a philosophical question,” MBank SA Chief Executive Office Cezary Stypulkowski said.

Szczurek said the government will use “all available tools” to make sure “banks are not using their privileged position to change the rules of the game unilaterally.” The antitrust regulator on Tuesday started a probe into lending practices to investigate whether banks changed the terms on loan contracts to exclude the possibility of negative interest rates.

Switzerland’s unexpected decision to end its currency cap last week sent the zloty tumbling 20 percent against the franc, swelling payments for about 575,000 families who borrowed in the currency. The issue is gaining political prominence before this year’s general election in Poland.

The main opposition Law and Justice party said last week the government should allow borrowers to pay off their swiss- franc loans at the Jan. 14 exchange rate, or before the SNB’s decision to scrap the cap.

‘Too Hasty’

That may do more harm than good, according to Szczurek.

“If we fixed the exchange rate at today’s level or, say, December’s level, it may turn out to be very unfavorable to clients over the longer term,” the minister said. “Such decisions can’t be too hasty.”

While Polish banks stopped granting franc-denominated home loans after the global economic crisis sent the zloty plunging in 2008, mortgage holders in the country of 38 million are still paying off debt from the last decade when they saw the Swiss currency as a way to borrow cheaply in an environment of a strengthening zloty.

“The burden will be on banks and their clients, and they will deal with the problem because it’s in their mutual interest,” Szczurek said. “The role of the regulator and the government will be to ensure competition is fair and symmetry between bank and client is protected.”

To contact the reporters on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net; Olga Tanas in Moscow at otanas@bloomberg.net To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Paul Abelsky, Andrew Langley

Bloomberg