It’s said that it’s a first of its kind in the history of Europe! It’s certainly the first such case in the history of Croatian court litigation. And – I am so glad it happened in Croatia – the country where democracy and citizens’ rights are still being painstakingly asserted.
Some months ago Croatian association “Franc”, together with “Consumer” society filed a collective lawsuit against nine banks in Croatia – claiming unfairness in the bank loan contracts’ currency clause and one-sided variable interest rate clause.
Judge Radovan Dobronic of Commercial court in Zagreb ruled last Thursday, 4 July, that nine banks situated in Croatia (mostly foreign owned: Zagrebacka bank, Privredna bank, Erste bank, Raiffeisenbank, Hypo Alpe-Adria-Bank, OTP, Splitska, Volksbank and Sberbanke) are to compensate the borrowers who took out bank loans in Swiss Francs for the banks’ overcharging. Some 100,000 Croatians took out the loans in Swiss Francs between 2005 and 2008 as they attracted lower interest rates at the time. However, when the global financial crisis hit in 2008, the exchange rate between Swiss Franc and Croatian Kuna spun out the scenario where – compared to the loan value in Kunas – the bank debtors were now owing much more than they borrowed and their repayment rates increased manifold.
Judge Dobronic ruled that the banks, as professional bodies, were wrong to offer their clients loan services tied to the Swiss Franc, with variable interest rates and variable loan principal. Such combination, ruled judge Dobronic, with unlimited variable interest rates and loan principal at times of exchange rates fluctuations and over a long period of time is completely unacceptable. He further stipulated that the banks in question had breached consumer rights because they did not fully inform them about all parameters necessary for making decisions.
So this court case in effect ruled about the proper bank behaviour in and around loan contracts, but individuals holding such loans will need to mount private and individual lawsuits against their banks in order to attempt receiving any compensation due to them from the banks.
It’s estimated that if all 100,000 people who took out the loans in Swiss Franc are successful in their court bids, the banks would jointly need to fork out some 15 billion Kunas in compensation (some 15% of the country’s current annual budget revenue!).
The plaintiffs in the above court case sought determination by the court that the banks entered into loan contracts dishonestly, when it came to currency clause in Swiss Francs with variable interest rates and claimed that the amounts payable on interest rates that changed over time should have been guided by the exchange rate of the Swiss Franc that was valid at the time when loan contracts were signed.
Croatian finance minister Slavko Linic is “keeping mum” about the whole affair, barely commenting that it’s the banks’ problem and that they will need to solve it.
Judge Dobronic’s ruling is yet to pass through an appeal process and if the banks appeal, and their appeal is overturned, then one may speculate as to whether such a large compensation payout will, in fact destabilise the banking sector in Croatia. It is certainly a large amount of funds that would gush out from the banks’ reserves/profits etc. And, what of many loans that were taken out in Euros, in Croatia, do they also hide similar contractual flaws!?
People who took those loans should be compensated for their losses if the facts are as stated by Judge Dobronic’s findings. I agree with that. But I find it incredulous that the banks could have been so stupid by assuming that “no one will notice” when the exchange rates change and loan repayment rates soar to borrowers’ financial suicide levels as a consequence.
It almost smells like a foreign owned banking conspiracy to destabilise Croatia.
Be it as it may, but it certainly looks as though consumer education and protection still needs a great deal of work in Croatia. This whole case also appears to me as if the banks issuing those loans in Swiss Franks attracted a clientele so needy that they didn’t even have enough courage to question the terms of the loans at the time even though much of the public may indeed have been savvy about the meaning and implication of changing currency exchange values. The whole scenario reminds me of bank loans issued in U.S.A. where repayments built to levels far above a person’s repayment capability and, in the end, bank foreclosures on homes spread like wildfire. The issue with Swiss Franc loans in Croatia is, I believe, much more serious than the media lets out and sadly, if those loan contracts are not fixed quick smart, many will find themselves without a home. So, while the finance minister may not want to say much about the problem, the justice minister must; he must push for speedy resolutions and ensure that the banks in question, because of such court ruling, don’t create a banking sector crisis and a housing crisis where foreign investment would be the only “salvation”. This would not be salvation – it would be slavery. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)
I believe In those days in Croatia, people where buying real estate to do quick profit without reading the small print as to what the consequences are going to be if they are caught with their pants down. Moreover, most of the people where not familiar with the big mortgages etc, because they were used to pay all their purchases with cash.
I don’t think I will blame the banks in this case
Certainly Roko, the banks will probably appeal the case. I do find the situation overwhelming, whichever way you look at. I do think, though, that many took loans out to purchase a home rather than make profit – from what I’ve seen on news etc.
Exactly. My nephew took loan for buying the flat in Zagreb and now, due to change of exchange rate, he is in debts to the neck. It is obvious, New World System is to rule by money, particularly small countries, which will soon colapse and be bought by rich.
Yes Michael, this case around these Swiss Franc loans is so blatantly awful that one may be justified to even believe it that banks (foreign owned) planned this terrible scenario from the beginning to bring Croatia or its banking sector to the knees. A conspiracy theory? Perhaps. But as they say in Psychiatry – if you suffer from Paranoia it doesn’t mean you do not have real enemies.
Europe union efect.
Could be, superduque777
“I do think, though, that many took loans out to purchase a home rather than make profit”
Maybe so Ina, I am sure you are more in tune with Croatia affairs. However, I remember reading in the Croatian daily’s (at the time of the boom) the real-estate was breaking every record in the book….not necessary by volume but the asking prices where just outrages.
So in my opinion those asking prices and few sales where enough to stimulate people to rush into the unchartered waters.
Yep. I’m sure Roko there was that too – people out for a cheap quick buck but many were simply taking the opportunity to secure themselves a home. take a mortgage and buy a flat or house, and repay the mortgage, which is now so bad given the situation that they’re drowning. But even with those whose sought to profit and make a quick buck if the banks erred in contractual relations then they erred and need to pay.
Banks and governments need to listen to the people.
Yes idealisticrebel – regretfully the reality is traveling the other way around and it will take very strong people to turn it around. Not impossible.
The main problem is that many people are not aware of an insidious plan, New World Order (as shown on the USA dollar note – Novus Ordo Seclorum) initiated by a German banker, Adam Weishaupt, in 1776. His picture appear on a jacket of my modern historical novel, Balkanska Urota. Unfortunately, my novel could not be published in Zagreb, since many publications are financially supported by the private enterprise. So much for democracy!!! .
Yes Vladimir Orsag – the new world order is dictated by financial power it seems and manipulation that can occur within that frame. Worldwide book publishing is controlled by private enterprise – money power indeed. And that too some will say constitutes democracy although one often wonders how much of that private enterprise is in fact controlled covertly by powers that be in politics, in media. Hence, self publishing is gathering more and more momentum and clout.
IT doesn’t metter what was the reason for purchasing a house with the help of banks (mortgage) loans.
Main issue is who is to blame for such systemic risk introduced in 2003 by some Austrian banks – banks, the Central Bank (CNB), Ministry of Finance or the Parliament.
This is a classical case of asymmetric information between banks as creditors and citizens as their Clints.
It is obvious that the CNB failed to regulate unhedged longterm housing loans paged to foreign currencies other than euros. CNB failed at list four times – (1) in 2003-2004 failed to prevent
(2) In 2006-2007 failed to recognize build-up of large scale systemic risk linked to Swiss franc housing loans (3) At the same time failed to prevent unusual influx of foreign capital and heating of loans market beyond acceptable level and (4) in 2008-2010 failed to hedge Swiss franc loans by converting them to euros or to local currency on time, allowing problem to escalate without taking any measure
The other issue is who is going to repay damages to citizens. The Court belives banks imorally took extra profit endengering clients with tocsic loans and must pay it back to clients.
Oneoff – it’s a terrible situation that I believe was powered by banks’ greed, the citizens who suffered losses must be compensated that’s for sure as I believe, however, it would be a terrible outcome if this case took the turn and destiny of savings in Ljubljanska bank in early 1990’s where it’s taking decades for people to get their money. Just a terrible shame.
Yes, bugger them, bearspawprint – thanks for this link
Please accept this Award I hope you can accept. I created this for what is said in Red
http://prayingforoneday.wordpress.com/2013/07/14/i-am-part-of-the-wordpress-family-award/
I would be honoured if you could accept. If you have it already, Simply put “Awarded x2” below it
Thank you
Shaun
Thank you, prayingforoneday
Shaun is the name 🙂
And the pleasure is mine
Welcome to my Word Press Family of writers and readers..
Shaun
Thanks Shaun
Hello,
I live in Romania and we have same problems with CHF here.
I might need a little help from you to open same type of action here against bank, if you have some time.
More exactly, I need link to original content of process to see what was the motivations(laws and directives) used by lawyer and rules from judge final decision. Hope you understand what I need.
Don’t worry if is not in English, we can use Google translate, but if you can find it already translate it, will be more helpful.
Thanks in advance.
Thank you dragos081975 on comment. There’s not enough information of what you need published on the net etc but I think that your best approach is to contact the Croatian Franc Association who were plaintiff in this court case and have legal team who may be able to assist. Their office is closed until 20 August (as it says on their website/which is both in Croatian and English). The website link is http://www.udrugafranak.hr
Wishing you the best of luck
Thank you very much for the information provided! Romania also prepare for a mega lawsuit. We will start soon!
May the people win, Loredana Al Ghazi
Hello Dragos. If you are living in Romania and if you want to recover your loss regarding the CHF loans I invite you to piperealaw.ro and complete a form and our team will take you into consideration and will provide legal aid in this matter.
Did you saw how huge amount they ask in advance? And how insecure is all in their “representative agreement”?
Who are those people to ask those money and what for.
IS HE same well-known lawyer?
If he look for solutions here where I look myself, even I don’t pretend money that, I’m happy to try to represent myself and not to pay to another for what I can do alone!
Is a proverb: “If you want money, get a job!”
Good afternon Mrs. Ina Vukic,
My name is George Cazac and I am representing a Romanian law firm who recently filled a collective lawsuit against several banks in Romania which offered loans in CHF using abusive clauses within the client’s contracts. I would really appreciate if you could tell me what the file number was in Croatia? We want to attack the banks here in Romania by basing our arguments on similar principles used by the parties in Croatia.
Kind regards,
George Cazac
Thank you George Cazac and good luck. I will send you an email with some details regarding accessing information you could use perhaps. I certainly sympathise with all the people who had those bank loans and lost so much – such unfair practice must be punished.
Hello, hope will can send those information to me also. I’m on my own, trying get a fear behavior from bank regarding CHF loan. Thanks in advance.
________________________________
OK dragos081975, will do
I say, the only way to end this SCUM, is to HANG THE BANKERS HIGH 😉
YEAH! 😀
The Banker: It Was Us That Created The Nazis
http://youtu.be/O78J-NGbnHo
Thanks Old Fart – much truth in it
I found this on point: http://www.larouchepub.com/other/interviews/2013/4037court_cyprus_austrty.html
Thank you John Durham
Dear Mrs. Ina Vukic,
My name is RAZVAN VIORESCU and I am representing a Romanian regional law firm who recently filled a collective lawsuit against several banks in Romania which offered loans in CHF using abusive clauses within the client’s contracts. I would really appreciate if you could tell me what the file number was in Croatia and the Court decision of Mr.Judge Radovan Dobronic in croatian or English?
We want to attack the banks here in Romania in similar legal way using this EU precedent.
best regards,
—
==========================
Razvan Viorescu
lawyer, Suceava Bar
Lecturer, PhD. University of Suceava
Phone: +40 722 529.815
Fax: +40 330 803.236
Thank you Razvan. I’m sorry I do not have the information you seek, that is court number and judgment in full. I suggest you inquire with the Franak Association in Zagreb (Udruga Franak) – they were a party to the court case and are still active especially in light of the latest development with Swiss Franc etc, I believe there is the appeal to the original decision still pending. If you do not succeed please let me know and I’ll see if I can help any further. Their email address is:
zagreb@udrugafranak.hr
thank you. i found out on the Frank Association the Decision at the following link:
Hotărâre definitivă a Tribunalului Comercial ridicat de 07/16/2014. în cazul “Frank” poate fi citit la următorul link:
http://www.vtsrh.hr/uploads/Novosti/VTSRH_P%C5%BE_7129-13-4_AN.pdf
best regards,
So glad, Razvan. Good luck and please do not hesitate to contact again if I can be of help. I feel so deeply for the many hundreds of thousands of people who have been brought to despair and ruin because of the loans in Franc…the situation is truly appalling
Dear Mrs. Ina Vukic,
My name is RAZVAN VIORESCU and I am representing a Romanian law firm who recently filled a collective lawsuit against several banks in Romania which offered loans in CHF using abusive clauses within the client’s contracts. I would really appreciate if you could tell me what the file number was in Croatia and the Court decision of Mr.Judge Radovan Dobronic in croatian or English?
We want to attack the banks here in Romania in similar legal way using this EU precedent.
best regards,
—
==========================
Razvan Viorescu
lawyer, Suceava Bar
Lecturer, PhD. University of Suceava
Phone: +40 722 529.815
Fax: +40 330 803.236