UniCredit Bank to Sue Croatia for Forced Conversion of Franc Loans into Euros?

Conversion of franc loans in euros could bring Croatia and banks to court.

Finance Minister Zdravko Marić said on Saturday that a letter which Italian UniCredit Bank, which owns Zagrebačka Banka, one of eight banks which used to offer loans pegged to Swiss franc on the Croatian market, sent to the Ministry of Foreign and European Affairs was an announcement that a lawsuit could be filed, reports Poslovni.hr on September 18, 2016.

“The Unicredit’s letter has not been received by the Finance Ministry, but by the Ministry of Foreign and European Affairs. This is a call for all institutions in Croatia to respond to it. We had a meeting with the Prime Minister about what position to take in this case if legal action is initiated at international courts. If arbitration and international legal proceedings are launched, then our primary responsibility will be to protect national interests and taxpayers”, Marić told reporters.

He stressed that there was still an option to find a compromise which would be acceptable to all parties in order to avoid international judicial proceedings. “The letters shows that they are ready to launch such proceedings”, he said.

Talking about the deadline for Croatia to respond to the European Commission’s letter which was sent in June, concerning the conversion of loans in Swiss francs into euros and the fact that the major part of the cost of conversion was paid by banks, Marić said that the European Commission had prolonged the deadline to 30 September. “Our reply has to go through the government’s foreign policy coordination, which will happen by the end of next week. By 30 September, we will respond to the letter that we have received from the European Union”, said Marić.

Due to changes in exchange rate of Swiss franc, monthly instalments paid by those taking such loans had become unbearably high. The government led by Zoran Milanović made a decision on conversion on loans in Swiss francs into euros. However, the costs of the conversion were mostly borne by the banks, which have threatened to sue the government and demand compensation for the costs.

 

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