Swiss franc (CHF) loans have fallen significantly in recent years following loan restructurings carried out by the banks according to a report from the Cyprus Central Bank.
The Central Bank reports that Swiss franc loans totalled €243 million at the end of September 2021, a fall of approximately €1.8 billion (88%) from €2 billion in December 2015.
Loans to non-financial corporations have fallen by 98%, while loans to households have fallen 81%.
The number of borrowers with the Bank of Cyprus, the Hellenic Bank and the Alpha Bank at the end of September stood at 1,339, a fall of 77.1% from 5,844 in December 2015.
The large fall in Swiss franc loans of the three banks is due to the ongoing servicing/repayment of existing loans and partly to the conversion/restructuring of the loans to euros.
According to the Central Bank’s report, during the third quarter of 2021, €467 million Swiss franc loans were written off or repaid.
The total borrowing in CHF for main residences fell €288 million in December 2015 to €85 million in September 2021, approximately €27 million of which relate to loans less than €250,000.
As of last September, the three banks had CHF loans amounting to €196 million, of which €123 million related to loans to households (€96 million mortgages).
Loan repayments amounted to €271 million with households having repaid € 162 million (of which €93 million related to secondary residences and € 49 million related to main residences.)
Non-performing CHF loans have fallen by 89% since the end of 2015, with loans to households falling by 82%.
Swiss franc loans in Europe
Many Britons allege they were mis-sold Swiss franc when they bought property on the island as holiday homes or permanent residences. Several organisations, legal firms and individuals have been helping them negotiate settlements with the banks with varying degrees of success.
The stress of the situation has led to three suicides to my knowledge and numerous marriage breakups. One of the organisations helping Brits is currently being prosecuted in the UK following investigations into numerous complaints brought by its clients.
In 2014, Hungary forced its banks to convert its foreign exchange mortgages into the local currency (the Hungarian Forint). In 2015, Croatia followed suit.
In 2019, a decision by the European Court of Justice enabled Polish borrowers to repay the balance of their debt in zloty, at the original exchange rate, rather than in Swiss francs.
I understand a number of Brits with CHF loans have also taken their complaints of alleged mis-selling to the European Court of Justice.
I was miss sold a CHF Loan by the largest Bank on the Island, I stopped paying them in 2015 and started legal proceedings, The trump card here is, On the day the loan was taken out, the Bank couldnt prove they bought the Swiss Francs, as far as my legal team was concerned either they had a stock of CHF or it was all fictional, in summer 2021, the Bank saw the light and accepted my offer of settlement which was 46% off of what they were asking, Im sure somewhere in this the Bank still made a good profit.
I dont believe the Banks here will ever be brought to book, as most managers, directors, employees are close relatives to the top judges.
which bank did you have your loan with please
The largest bank on the island is the Bank of Cyprus.
Buying a new car I went to a well known Car Dealers in Paphos, just some thousands short of the Euros in the bank at that time, I enquired about whether the dealer could arrange HP for the difference, as I could have done in the UK? only to be told that the dealer didn’t arrange HP, with the quote. “Cypriots have a tendency not to pay back loans”.
A cheque for the majority and the rest on my credit card was rejected due to the cost imposed by the credit card company.
So I went to the bank I’ve used for 20yrs and always been in credit explaining to the manager I just needed a bridging loan, I had the money in sterling, but needed Euros for a new car, a period of say 2-3 days? I was told that any loan would need to be approved at Nicosia which would take at least 2 weeks, and in any case I was too old to have a loan as a pensioner so it would be rejected.
I had sympathy from the manager as he’d worked in the UK and knew there I wouldn’t have problems, but he couldn’t help in Cyprus.
Fortunately I was able to fast track Premium Bonds into Sterling into Euros and I got the car, but it was a close thing.
I suppose Cyprus Banking system will not change in the next 20yrs either.
Fortunately, I have no need for a mortgage from any bank. However, I am a customer at both a Swiss and a Cypriot bank.
For this message, I shall mention only generalities applicable to both banks, probably applicable to all sectors of banking but, in particular, to customer relationships.
With my Swiss bank, I have no problems of bureaucracy. Their services have always seemed well managed and, should I have a question, I can address it by phone or email to a named individual who can handle any problem without undue bureaucracy, usually within a few hours.
On the other hand, communications with the Cypriot bank are difficult. A simple email question might take two or even three days to be answered. I have a feeling that their use of A4 sheets of paper must be a novelty that has to be exploited to the full, judging from the fact that my file is three times fatter than the Swiss one for roughly equal numbers of transactions.
Every time I enter a Cypriot bank, I have the feeling that the word efficiency is unused by any of the random interlocutors that I come in contact with.