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Swiss franc loan annulled in Slovenia

In a ruling that could have implications for the Cyprus banks, a Slovenian court has annulled a Swiss Franc loan used to acquire property because the bank failed to advise the customer of the risks.

Swiss france loans

Swiss National Bank

A COURT in Slovenia has annulled a real-estate loan in Swiss francs because the borrower was not informed of the high risks of such a currency deal, the borrower’s lawyer said on Friday.

The decision puts as much as 524 million euros of loans held by Slovenian banks at risk and may have implications elsewhere in Europe.

Households and firms in Slovenia and elsewhere in Europe took out loans denominated in Swiss francs, mostly from 2004 to 2008, to benefit from low Swiss interest rates.

But their repayment obligations later soared due to a surge in the franc, particularly after Switzerland scrapped its cap on the currency in January 2015.

“This is a break-through decision. It is the first such decision in Slovenia and one of the first in the European Union,” the lawyer, Robert Preininger, told Reuters.

“The main reason for such a decision is that banks were aware of high risks and of a possibility of depreciation of the Swiss franc but did not inform consumers of those risks while they expected to profit on that account. That was a very immoral business practice,” he said.

Preininger declined to give any details about the loan or borrower.

According to the court decision the borrowed has to repay the Slovenian unit of Austrian bank Sparkasse only the amount of loan received without any interest, Preininger said.

He said this meant the total repayment will be at least 60 percent lower than it would have been if the loan was not annulled.

Sparkasse told Reuters it has not yet received the decision and gave no further comment. The court – the appellate High Court in Ljubljana gave no immediate comment.

The central Bank of Slovenia told Reuters total outstanding amount of loans in Swiss francs amounted to 524 million euros at the end of May 2017 but gave no comment on the ruling.

According to local media a total of about 20,000 loans denominated in Swiss francs were given to individuals and companies by the Slovenian banks.

(Reporting by Marja Novak Editing by Jeremy Gaunt)

Readers' comments

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  • aj says:

    You state you started litigation in 2014.
    We are deciding wether to go down that route and have been told it will probably be 5 years untill our case would be heard. Also it will cost approximately €20,000.
    Could i ask how much you were quoted and how much it has cost you until now. You can email me privately if you want. [email protected].

  • John says:

    Greece moves towards the elimination of Fx Loans
    Posted on 10/12/2017 · Posted in Greece, Judgements

    As we informed in june 2016, thounsands of Greece consumers were fighting against Eurobank in a collective litigation. The claim was heard before the First Instance court in November 2015. The first-instance ruling was handed down on 24/5/2016 (known as the “334/2016 decision”), which fully vindicates the borrowers. Nevertheless, Eurobank appealed the decision. The collective lawsuit was heard at the Appeals level on 28/9/2017 and included an increased number of claimants-participants. The ruling is expected to be published in the coming months.

    In the meantime, we have been informed that the first-instance rulings for the collective lawsuits against National Bank of Greece and Alpha Bank vindicate the borrowers.

    Both the decisions (799/2017 for National Bank of Greece and 800/2017 for Alpha Bank) order that:

    1.These are loans with a foreign currency value clause, and not loans of the same currency,
    2.CHF Loan Agreements are not simple loan contracts but complex financial products,
    3.The courts accept that these loans were swapped, since what the borrowers received was the product of “converting” the loan from CHF to EUR.
    4.consumers have no specialized knowledge of investment portfolio products,
    5. also the employees of the bank were not specifically certified according to article 4 of Law 2836/2000, as replaced by article 49 of Law 3371/2005 and article 16 of Law 3606/2007, in order to provide such products,
    6.finally, consumers have never been adequately, clearly and completely informed of the risks arising from this kind of loans.

  • LT says:

    Thank you editor for your response. in our case (and probably majority of other cases) bank knew we did not have an income in CHF and we were quite open with the fact. Sadly, most consumers don’t know what reserve currency is and how exponentially risky is taking a loan in a reserve currency. I guess we got an expensive lesson.

    Ed: There are hundreds of people either negotiating or taking action against the banks in Cyprus alleging mis-selling of Swiss Franc loans.

  • LT says:

    I would like a clarification on this article. It says:

    But did not inform consumers of those risks while they expected to profit on that account.

    Does that mean that there was a proof that banks new that CHF will go up? I unofficially heard that some emails surfaced in Greece proving that bankers new what is going to happen.

    To me it is logical that if the banks across Europe were giving HF loans that would create a large artificial demand for CHF and as a consequence CHF would go up.

    Ed: Probably not – but there’s a risk in taking loans in a currency that you are not paid in, particularly if it’s a reserve currency.

  • John says:

    Linda – The main reason that court dates regarding Alpha Bank are postponed is that they are scared stiff of facing judgement against them. It’s just a time game now, Hang in there.

    It’s quite interesting that The Greece – Alpha Bank division are actually settling CHF loans on the orders of the Greek government! For some reason the Cyprus Government are holding back on issuing such a directive!

  • Linda says:

    We started litigation in 2014 after not being able to come to an agreement with Alpha Bank.

    I suspect we are in a very long queue as the company we are using started their first case in 2011 and they are still waiting, they have had many court dates set but they are always postponed!!!

  • Gary says:

    That’s great news Andy – well done. I’d be interested in hearing a bit more about your experience as my load is with the BoC as well.

  • Andy Georgiou says:

    I have settled my dispute with the Bank of Cyprus over my Swiss franc loan. I took them to court in Paphos and after 9 months achieved my settlement.

    Of the outstanding €86,000 balance I received a 64% discount and paid €31,000 to pay off the loan.

    Mine was complicated by the fact that the Builder had €21,000 frozen in my name which was also taken by the bank. This amount was paid by the builder because he did not continue with payments for an insurance guarantee that I would repay my loan.

  • John says:

    We have recently been told to expect that our CHF mis-selling complaint against one of the Cyprus banks could take up to 5 years to be heard in the Cyprus courts. (It does make one wonder if the Cyprus Bank managers actually run the courts)

    Absolutely scandalous!

    Lets hope the Cyprus government have the guts/bottle to expedite this awful situation – Annulment of CHF loans required ASAP!

  • Janice says:

    Good news, and finally it is clear the banks never had any justification seizing or threatening UK assets, pretending they had done nothing wrong.

    However, is a ‘discounted’ loan sufficient to address borrower’s losses? The original selling prices were inflated due to the apparent low cost and availability of finance. The banks subsequently inflated their interest rate margins too causing the property crash.

    Borrower’s have suffered 10 years of anguish, uncertainty, lost opportunities elsewhere, legal costs – all with consequences to health and family.

    A discounted or reduced loan is no longer enough. Only a full refund of all costs, plus compensation would be fair, with a choice over keeping the property.

    A ‘discounted loan’ now, is like a car dealer saying your brand new BMW is being delivered, but it has suffered an earlier car crash. You are told you have no choice but to take delivery of the damaged car, but you will be entitled to claim a part refund.

  • Gary says:

    I mentioned this in an earlier post… the Cypriot Parliament should be using this as building evidence to leverage power against the banks. Threaten them that the penalties will be harsher if Parliament and the courts are forced to act. Give them one last chance to rectify this mess satisfactorily and specify the timeframe. Otherwise, you will be hit hard, very hard.

  • John says:

    I hope the Cyprus banks are reading this article! Your time is running out – lets get you in to court!

    Ed: There was a recent court decision in Greece on the subject instructing a bank to resets the CHF exchange rate to the date it was when the loan was granted. The ruling isn’t applicable in Cyprus but it could be used by lawyers in Cyprus representing CHF borrowers to strengthen their cases. The article is in Greek and can be found at Απόφαση-σταθμός για δάνεια σε ελβετικό φράγκο.

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