The Slovenia Times

Banks warn about harmful consequences of Swiss franc loan bill


Ljubljana - Slovenian banks have come out strongly against a bill the upper chamber of parliament has tabled to help several thousand borrowers who took out loans in Swiss francs at low interest rates while their monthly instalments skyrocketed when the Swiss central bank stopped protecting the value of the currency in 2015.

"The banks are preparing a petition to challenge the bill at the Constitutional Court, including a proposal to stay it, because the bill is unimplementable," SKB Banka executive director Anita Stojčevska said at Monday's news conference hosted by the Bank Association before the lower chamber votes on it on Wednesday.

"The bill retroactively encroaches on the lawfully concluded contracts, which is not harmful only for the banks but for the entire economy, because it means that no contract in Slovenia is safe from a retroactive intervention," said the association's director Stanislava Zadravec Caprirolo.

The new legislation would also negate court decisions, she said, explaining that courts had already taken decisions in half of the 250 lawsuits concerning the issue. Sberbank chairman Jana Benčina Henigman noted that the court proceedings had concluded in favour of the banks.

Under the new legislation, banks would have to draw up annexes to the contracts concluded between 28 June 2004 and 31 December 2010 to include a cap on the franc exchange rate change to distribute the risk between the bank and the borrower. This would have to be done in 60 days after the law in implemented, including for the loans that have already been repaid.

Several bank executives said "the bill is unfeasible in practice". "Passing the bill would mean serious trouble," said Addiko Bank chairman Andrej Andoljšek.

One of the problems is that banks no longer possess the contracts for the loans repaid before 2012 because, under personal data rules, they can keep them only for 10 years.

The association estimates there could be over 50% of such contracts, which Stojčevska said would result in a huge amount of work and complex calculations to recover the data.

Although the bill does not provide an estimate of its financial consequences, NLB chairman Blaž Brodnjak said they would be measured in "hundreds of millions of euros".

The bill also says a bank can be stripped of its licence if it fails to implement it in more than ten cases within the deadline. "This means that most of the banks are at risk of losing their licence," said Sabina Župec Kranjc from NKBM.

The association stressed this could pose a serious threat to financial stability and cause an unfathomable damage to the economy and the country.

The banks do not consider the bill to be economically or socially justifiable, with Zadravec Caprirolo saying it did not address the hardships of those who cannot repay the loans.

Households had over EUR 10 billion in loans in end-2021, of which Swiss franc loans accounted for less than EUR 300 million, while the share of the loans that borrowers cannot repay is the same for francs and euros. She said the bill addressed a very small group of people, and quite well off too.

The bill is not seen as fair to those who took out loans in euros and consequently paid higher interest rates, either. "It does not bring a solution to potential injustices, it creates new, ever worse ones," said Župec Kranjc.

She said that NKBM had successfully closed 92% of these loans, with fewer than 900 contracts remaining open, and added: "The bank did not benefit from the change in the exchange rate."

Benčina Henigman believes the planned retroactive intervention would be a severe encroachment on the rule of law, undermining trust and harming Slovenia's reputation.


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