WARSAW- The Polish unit of BNP Paribas will not decide whether to offer out-of-court settlements to the holders of Swiss-franc mortgages until the Supreme Court issues guidelines on the issue on March 25, its chief executive said on Monday.

Thousands of Polish borrowers took out loans denominated in Swiss francs more than a decade ago to take advantage of low Swiss interest rates, but then faced ballooning repayments when the zloty weakened sharply against the franc.

In December, the head of Poland's financial market regulator KNF proposed a plan for banks to convert foreign currency loans into zlotys as if they had been taken out in the local currency originally.

While some observers initially expected banks to try and finalise a plan for such out-of-court settlements before the Supreme Court sitting, lenders now appear to be waiting for guidelines that could prove crucial to clients trying to decide whether they should go to court.

"We want to be as well prepared as possible for the decision we will have to take, and we will not take it before March 25," said Przemyslaw Gdanski.

He added that the bank was running tests regarding out-of-court settlements to see how clients react to different clauses in the contracts.

The Polish central bank, which has said it may participate in the KNF plan, said on Thursday that it was yet to receive any information from banks regarding the conditions it laid down, including resolving legal uncertainties related to the plan and a sufficient level of participation by banks. It added that banks were probably waiting for the Supreme Court sitting. 

"Today it is too early to say if we will be prepared to offer such settlements or not," Gdanski said.

(Reporting by Pawel Florkiewicz, writing by Alan Charlish; Editing by Kirsten Donovan) ((alan.charlish@thomsonreuters.com; +48 22 104 25 27 ;))