The Franak association of former holders of CHF-indexed loans has called on the Croatian Central Bank (HNB) to report to the public on provisions the banks are expected to set aside for customer lawsuits in the CHF case, asking Governor Boris Vujcic to answer a few questions about those provisions. Pročitaj više

Recalling the final court ruling on a class action in the CHF case, which found bank regulations on the CHF currency clause and variable interest rate null and void, Franak says that bank clients have the right to compensation, as confirmed by a Constitutional Court decision, while a decision on loans that were in the meantime converted to euro loans was pending at the Court of the EU.

Franak said that as the bank market regulator, the HNB is obliged to order the banks to set aside provisions for customer lawsuits.

In its letter, Franak asked HNB Governor Vujcic if he has ordered the banks to set aside the money to pay compensation to clients based on successful individual lawsuits, including money for default interest.

The association also wants to know if the banks have set aside the money, how much money has been set aside so far and if banks convicted in the CHF case have enough free capital to pay damages to their clients in the CHF case, totalling between 20 to 40 billion kuna.

Franak notes that around 35,000 cases against banks are currently under way based on the class action, and that so far more than 1,000 bank clients have been paid compensation, 10,000 have received first-instance rulings while 20,000 holders of converted loans, who had sued banks without waiting for the decision of the Court of the EU on whether they have the right to compensation, are waiting for the outcome of their cases.

“Our rough estimates show that banks owe clients around 50% of the amount of all realised CHF loans. If the loans totalled 44 billion kuna, banks roughly owe clients around 22 billion kuna including default interest, and if such contracts are found null and void, the amount rises to around 40 billion kuna,” Franak says in its letter to the HNB among other things.

Franak brings together former holders of loans pegged to the Swiss franc whose conversion to euro-denominated loans was enabled by the government led by Zoran Milanovic.

On 4 July 2013, the Zagreb Commercial Court delivered a ruling in favour of the Consumer Protection Association which had sued 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 Dobronic, who said at the time that the banks had violated consumers’ rights by failing to fully inform them about all the parameters necessary to decide on taking loans.

The ruling on the legal nullity of the currency clause in contracts on loans pegged to the Swiss franc was later upheld by the High Commercial Court and its ruling was upheld by the Constitutional Court.