FRANKFURT, Reuters – Commerzbank (DE) said Friday that its fourth quarter earnings will be impacted due to provisions at Polish mBank but would post a profit for the entire year.

German lender mBank stated it had provisions in place for the foreign currency indexed lending agreements amounting to 2.006 billion zloty ($504m), and that the fourth quarter results would suffer from the same amount.

Additional funds of around 436million euros will be available to Germany’s number 2 bank. Around 600 million euros is the amount of provision made for Germany’s No.

Commerzbank is currently in the middle of costly restructuring, including closing down branches and reducing headcount by 10,000.

The issue, which has affected banks operating throughout Poland, stems from more than a decade ago, when mortgage customers took out loans in Swiss francs https://www.reuters.com/world/europe/polands-supreme-court-evacuated-due-bomb-threat-twitter-2021-05-11 to take advantage of low Swiss interest rates, only to face far higher costs when the value of the Polish zloty slumped.

Polish courts are deciding the treatment of loans and what interest banks may charge for them. This has created uncertainty for both banks as well as their bottom line.

Following the announcement, Frankfurt-listed shares of the German lender were reduced by 3.5%.

Commerzbank attempted to sell mBank, but gave up after the auction in 2020.

($1 = 3.9814 zlotys)