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Accomodation in Croatia

20,January 2015
The Croatian government propose one year CHF freeze at HRK 6.39

The Croatian goverment a house

ZAGREB: Prime Minister Zoran Milanovic on Monday 19.January told a press conference that the government would to recommend to parliament amendments to the law on consumer loans which would determine the exchange rate for the Swiss franc to be set at HRK 6.39 for a period of one year at the expense of financial institutions.
"Over the next year we can sit down to talk about converting loans pegged to the franc into kuna value but that will require the consent of the Croatian National Bank (HNB) because that is not exclusively in the government's authority," Milanovic said.
The prime minister was speaking after a meeting of representatives of the Finance Ministry, the HNB and commercial banks.
According to HNB figures, the total value of loans pegged to the Swiss franc at the end of September 2014 amounted to HRK 23.7 billion and more than 92 per cent of these loans were taken by citizens, primarily as housing loans.
According to the Franak civil society organisation, representing people with loans pegged to the Swiss franc, there are around 60,000 loans pegged to this currency and the latest jump could impact around 200,000 to 300,000 citizens in the country.

Reaction from the banks

As Hina has unofficially heard from some banking circles, this, as they said, one-sided decision by the government has surprised them as they were still only at the phase of discussion.

As Hina has unofficially heard from some banking circles, this, as they said, one-sided decision by the government has surprised them as they were still only at the phase of discussion.

Bankers told Hina off-the-record that the financial effects and impact on clients with loans pegged to the Swiss franc would be the same in both cases as proposed by bankers or by the government, but bankers proposed a short term measure of three months which is more in their favour because of the cost that would occur with the franc's rising price but also to sooner facilitate a permanent solution.

A period of one year is also worrisome for banks because of the timing of elections. Some bankers said that after the parliamentary election at the end of the year, the new government would immediately be faced with this same problem and the question is just how motivated the incumbent government will be to find a permanent solution for these loans this year.

Bankers also warned that this decision could be legally questionable and the possibility that the state may have to compensate the financial losses that banks might incur cannot be excluded.

As far as secondary negative impacts on commercial banks were concerned, bankers told Hina that they did not expect any major upheaval in the banking system in the country.

Bankers underscored that the stability of the banking system remained high due to their high capital reserves. However, a direct negative impact cannot be ruled out such as that it may add to legal insecurity in doing business and as a consequence, bankers warned, it is possible that lending potential could be reduced to finance the economy but also the state on the domestic market.

The Franak civil society group on behalf of debtors with loans pegged to the franc on Monday said that the government's proposal to freeze the franc for a year for people with housing loans in this currency, offered a short term solution which is nowhere near their demands for a systemised and long term solution to the problem and that they would continue to mobilise their membership for possible protest rallies.

FROM: dalje.com



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