Croatian loan holders set to sue banks over Swiss francs loans

Croatia’s Supreme Court ruling on loan holders in Swiss francs cleared the way for a massive lawsuit against banks. Association of loan holders said on Wednesday that they expect more than 100,000 citizen’s lawsuits by 2023.

“The Supreme Court’s ruling is final and binding, and everyone who sues the banks will certainly receive the money-back,” Goran Aleksic, a member of the Croatian Parliament and an activist of the Franak Association, told Xinhua.

On Tuesday, the Supreme Court issued a ruling confirming that the banks who were granting loans in Swiss francs violated the collective interests and consumer rights of credit user.

The court spokesman said that loan contracts contained unfair and invalid contractual regulations under which the loan principal was tied to the Swiss franc. He noted that banks didn’t negotiate the matter with individual loan holders.

The association Franak which represents loan holders believes that the ruling is a “win for savers” in a collective lawsuit that they have pressed against eight banks and that anyone who has raised loans in Swiss francs will be able to sue banks by 2023 to get repayment for overpaid interests.

From 2003 until the end of 2008, banks here had issued more than 125,000 loans to Croatian citizens that were paid in local currency but fixed to Swiss franc exchange rate. After the financial turmoil of 2008, Swiss franc appreciated and many loan holders in Croatia were unable to keep up with their monthly payments that suddenly have been raised.

On the initiative of the Franak Association, citizens began suing banks, claiming that the rules of the Obligations Act were violated, and the decision of the Supreme Court of Croatia opened the way for depositors to receive their overpayment of interests.