ZAGREB, July 12, 2018 – Croatia’s High Commercial Court has overturned an appeal of eight lenders that were sued over Swiss franc indexed loans, and upheld a ruling of the Zagreb-based Commercial Court about the legal nullity of the foreign currency exchange clause in the case of the CHF-indexed loans.
The 70-odd-page ruling, which was made public on the High Commercial Court’s website on Wednesday, shows that the court has quashed the appeal of Zagrebačka Banka, Privredna Banka, Erste Bank, Raiffesenbank Austria, Addiko (previously known as Hypo Alpe-Adria-Bank), OTP, Splitska Banka (previously known as Societe General- Splitska banka), and Sberbank (previously known as Volksbank).
On 4 July 2013, the Zagreb Commercial Court delivered a ruling in favour of the Consumer Protection Association that sued the eight banks with regard to the Swiss franc foreign currency clause and their unilateral decision to increase interest rates. The judgement was handed down by Judge Radovan Dobronić who said then that the banks had violated consumers’ rights when they failed to fully inform them about all the parameters necessary to decide on taking loans.
The class action against Zagrebačka Banka, Privredna Banka, Erste Bank, Raiffesenbank, Hypo Alpe-Adria-Bank, OTP, Splitska Banka, and Sberbank was the first of its kind in Croatia.
The Commercial Court ruled in favour of the suit filed by the Potrošač association on behalf of 100,000 citizens who had taken loans pegged to the franc, three-quarters of them housing loans. The latest ruling refers to loans taken from 2004 to the end of 2008.
The loans were offered at a variable interest rate, at a time when the franc was relatively weak. But the Swiss currency rose sharply in value after the global financial crisis started in 2008, leading to higher monthly instalments for clients.
On top of that, the banks raised interest rates, citing higher costs of capital and money market rates. As a result, monthly instalments rose on average by about 50 percent.