ZAGREB: Croatians who owe debts denominated in Swiss francs hope the loans will be nullified after a Slovenian court threw out a similar loan there, a debtor representative and a parliamentary deputy said on Friday.
The Slovenian court said the borrower was not informed of the risks that a loan in Swiss francs entailed. Croatian activists say the same applies to franc loans in Croatia.
"We strongly believe that the loan contracts were lacking appropriate and essential information about the currency and variable interest rate risks," Goran Aleksic from the Franak association, which provides help to people who took out Swiss franc loans, told Reuters.
Many households and companies in Croatia, Slovenia and elsewhere in eastern Europe took out loans, largely mortgages, between 2003 and 2008, to benefit from low interest rates for Swiss franc debt. But their payments soared when the franc surged in value, particularly after January 2015, when Switzerland scrapped a cap on its currency.
The High Commercial Court is now set to reassess whether eight local banks, owned by the parent banks in other European Union states like Italy or Austria, were offering Swiss franc loans unfairly and whether such loans had to be nullified.
"In the last 10 years, the banks have earned some 50 billion kuna ($8.40 billion) and potential costs for them, as the loans have been excessively repaid, could be up to 25 billion kuna, which would still leave them a fair profit," Aleksic said.
Before an election in late 2015, Croatia's government pushed through a law ordering banks to convert franc loans into euros, at the banks' expense.
But the Constitutional Court ordered a retrial in a debtors' lawsuit against banks after the Supreme Court ruled in their favour. The higher court said the Supreme Court did not properly explain its ruling.
Four banks have sued Croatia for enforced conversion at an arbitration court in Washington, citing violations of international obligations and investors' expectations. The banks insist that the Swiss franc loans were fully in line with legal framework at the time.
"The clients have been provided the information that the (Swiss) currency is exposed to fluctuations," said a banking source who asked not to be named. Variable interest rates were also explained, the source said.
Comments
Comments are closed.