At the time of writing, Polish policymakers appeared to be backing away from much-hyped plans to force the country’s banks to convert large legacy portfolios of Swiss franc mortgages into zloty at historic rates.
This is clearly the sensible option. Swiss franc mortgagees in Poland are not particularly poor and Polish lenders are not particularly profitable, thanks to low interest rates and a hefty bank tax. What is more, following the acquisition of Bank Pekao from UniCredit, the state now owns a sizeable chunk of the sector.
That might seem reason enough to abandon the idea of an expensive forced FX mortgage conversion. Yet rumour suggests that this may not be the only, or even the primary, motive behind the decision.
Locals say a more cogent explanation of the volte face could be policymakers’ desire to boost Warsaw’s credentials as a financial centre, at a time when the headquarters of the European Banking Authority (EBA) is up for grabs – it will definitely be leaving London.
Where it should go instead, however, is still a very open question. The obvious candidates – Paris, Frankfurt, Milan and Luxembourg – are all said to have thrown their hats into the ring. Meanwhile, less likely contenders include Stockholm, Vienna – and Warsaw.
At first glance the Polish capital looks like a rank outsider. Not only is Warsaw not a big financial hub, it is also a notoriously unloved city. Then there is the current Polish government, which has made few friends in Europe during its first 18 months in power. In late February, the ruling Law and Justice Party (PiS) rejected a European Commission recommendation to reverse changes to its constitutional court that EU authorities – and others – say endanger Polish democracy.
Barely a fortnight later, PiS policymakers again made waves by trying to oust their bête noire, former Polish prime minister, Donald Tusk, from his post as head of the European Council. Of the 28 EU member states, Poland was the only one to vote against Tusk’s re-election.
Nevertheless, Warsaw does merit serious consideration as a venue for the EBA. For one thing, there are currently no large EU agencies headquartered in the former communist states that joined the bloc in 2004 and after.
It would also be appropriate given that one of the chief functions of the authority is ensuring cohesion between euro and non-euro countries within the EU. The latter are already concentrated in emerging Europe and will only come more into focus once Britain exits the Union.
The fact that Warsaw does not currently figure on the list of European financial hubs may also not be as much of a hurdle as it seems. An impressive array of banks from western Europe and beyond have back-office and, increasingly, middle-office centres there. By choosing Warsaw for the EBA, EU authorities have an opportunity to demonstrate both their recognition of this and a readiness to think outside the western European box.