Hungarian OTP Bank has launched international arbitration proceedings against Croatia, joining a group of banks seeking compensation for costs arising from the conversion of loans denominated in the Swiss franc.
By adopting a 2015 law on the conversion of CHF loans into euro-denominated loans, Croatia violated the investment protection agreement with Hungary, the bank said in a press release on Monday.
OTP has launched arbitration proceedings before the International Centre for Settlement of Investment Disputes (ICSID) seeking an estimated HRK 224 million (€30m) in compensation for conversion-related costs.
The ICSID Secretariat received OTP’s application on October 16, the press release said.
OTP noted that it wanted to settle its claim through negotiation, calling the legal action a secondary option.
The Hungarian bank thus joined a group of banks that have already initiated arbitration proceedings against Croatia before the ICSID over the conversion of CHF loans. The group includes Zagrebacka Banka, Raiffeisen Bank International, Addiko Bank, Erste Group and Societe Generale, whose Croatian branch has in the meantime been taken over by OTP.
Eleven cases against Croatia are currently before the ICSID, including one initiated by the Hungarian energy group MOL, while three cases have been closed.