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Alpha Bank loses Swiss Franc loan court action

Alpha Bank Cyprus has lost a court action it took against a British national who failed to comply with the obligations of his Swiss Franc loan agreement with the judge at the Larnaca District court awarding costs to the defendant.

Alpha Bank loses Swiss Franc loan court actionTHE ALPHA BANK recently failed in its court action against a British national, ‘xxx Johnson’, who it accused of failing to comply with the obligations of his Swiss Franc loan agreement concluded with the bank in August 2008.

(Regular readers will recall that in 2016 the Cyprus Consumer Protection Service (CCPS) fined Alpha Bank Cyprus €250,000 for its business practices relating to mortgage agreements.)

In his defence, Johnson argued that the loan agreement was unenforceable as the Alpha Bank ‘forced’ him into the Swiss Franc loan agreement and, by failing to explain the risks associated with foreign currency loans, the bank violated Article 4(2) of the European Directive 93/13/EEC of the 5th April 2003 on unfair terms in consumer contracts.

One of the witnesses who gave evidence on behalf of the bank who was present when the loan agreement was signed acknowledged that there are risks in foreign currency lending – and pointed out that it’s the bank’s usual practice to explain the risks to borrowers. However, he did not know whether the risks had been explained to Johnson.

Johnson explained that he was not an expert in financial matters and that the bank had advised him to take a Swiss Franc loan because of its low interest rate. All the bank told him that the loan would be for CHF 302,000 repaid with 175 tranches of CHF 2,274.96. At no time did the bank advise him of any risk and, in particular, that his monthly instalments would increase if the Euro depreciated against Swiss Franc.

Furthermore, the bank did not give him enough time to read and understand the loan agreement or the opportunity to discuss it with a lawyer or financial adviser to explain the terms and consequences of a Swiss Franc loan.

The judge agreed that Johnson would be unaware of the inherent risks associated with foreign currency loans and, furthermore, the bank had failed to provide any evidence to the court confirming that it had advised him accordingly.

Following various legal arguments and rulings in related cases (one of which was a judgement of the European Court of Justice), the judge rejected the bank’s claim and awarded costs to Johnson.

Further reading

Alpha Bank Cyprus Ltd ?. Johnson ?.?., ????? ??.: 1267/2012, 29/3/2019 (Court decision – Greek)

Editor’s notes

Although the Larnaca court’s ruling looks positive, Alpha Bank Cyprus may appeal.

This ruling by the Larnaca court does not set a precedent – only rulings by the Supreme Court can set a precedent.

Last month, Greece’s Supreme Court overwhelmingly ruled that some 70,000 who took out loans in Swiss Francs will have to repay them at the current exchange rate. See Swiss franc loan court decision in favour of banks.

 

Readers' comments

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  • Angry of RoC says:

    Following on from Mike & Conor’s comments below regarding costs and the pace of justice (if any) in the Mafia statelet it would appear the only real hope of regaining deposits/costs for UK buyers is for claims against the Banks and Developers to be heard in the UK.

    Has anyone got any news about the Alpha Panaretti jurisdiction appeal hearing in the Royal Courts of Justice and how that is going. I understand it was re-scheduled for around May 2019, if so can anyone foresee or notify the many other victims of the outcome ?

    Ed: As soon as any news is made public, I’ll publish an article. And you can check court decisions for yourself on the British and Irish Legal Information Institute databases. Please ensure you spell Panareti correctly (with a single ‘t’).

  • Deborah Hodges-Pearce says:

    We are in the same position, is there some way that we can obtain a copy of the judgement in English. Thank you.

    Ed: Court rulings are only available in Greek. A Greek friend read it and gave me the salient points for the article. One thing you can do is open the court ruling using the Google Chrome web browser. Chrome has a translation facility that will give you the gist of the judgement. But to get an authoritative translation, you’ll need to get it translated professionally.

  • Mike says:

    All in all a sorry state of affairs fuelled by Governments continued reluctance to pass effective legislation to put a stop to the title deeds fiasco once and for all.

    I suspect because those very same fraudsters are friends and benefactors of the MPs being asked to legislate. Who do you think they will protect, the faceless consumer or the friends and benefactors who supply the donations to fund political campaigns for re election. Not rocket science is it but pitiful in that many of those same MPs have NPLs outstanding and have stood as guarantors for developer loans. Hence the periodically raised questions re passing legislation not to keep guarantors responsible for loans. Clearly some in parliament do not understand the meaning of ‘guarantor’.

    Keep fighting for your rights folks. We have to understand that with EU membership come EU values and we must hold our MP’s to account for not implementing the basic human right of ‘right to property’.

  • Deanna says:

    @ Conor, All the best for tomorrow; please give us feedback.

  • Conor O'Dwyer says:

    These contracts were deemed abusive throughout the EU and should never be enforced. This case was filed in 2012 and the bank put up a fight. “awarding costs to the defendant” does not mean what it does in the UK, there is no figure given in the judgement.

    In the end, the bank will pay court fees and if the defendant is lucky maybe they will scrape back a few hundred pounds. How many thousands did this case cost to defend? How many hearings? How many trips to Cyprus over the 7 years? A prime example of ‘you win your case, but lose outright’ and no punishment to the Cypriot bank.

    I pray this is not appealed as that will take another seven years and I wish the Johnsons some peace.

    Tomorrow I’m protesting my 13-year case outside ‘A Place in the Sun’ exhibition in London. I’m joined by Pissouri landslide victims and others going through the same Swiss Franc contract cases. There are hundreds going through this very same battle. Very sad.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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