Banks agree to end action against Croatia in loan conversion dispute

Addiko Bank AG

02/02/2021 12:34

ZAGREB, Feb 2 (Reuters) - Six banks have agreed not to take
legal action against Croatia over its conversion of Swiss franc
loans into euros in 2015 at the lenders' expense, the finance
minister said on Tuesday.
    Many individuals and companies in Croatia and eastern Europe
had taken out Swiss franc mortgages to benefit from low interest
rates but were then caught out when the franc strengthened in
2015, leaving them with higher debts to pay.
    Croatia's then centre-left government forced banks to
convert the loans to euros to protect borrowers. The banks
carried the costs of about 1 billion euros ($1.2 billion),
prompting them to either launch lawsuits or threaten action
saying costs had not been fairly shared out.
    Finance Minister Zdravko Maric said six banks, which sought
redress in Croatian courts and at the International Centre for
Settlement of Investment Disputes (ICSID) in Washington, had
agreed to end their action or said they would not start any.
    "By this we removed a threat of the potential financial
obligation for the state coffers worth at least 2.5 billion kuna
($397 million)," Maric, a minister in a centre-right government
that took office last year, told a news conference.
    Maric said the banks which had agreed to drop their lawsuits
at home and abroad were Zagrebacka Banka  ZBB.ZA , owned by
Italy's UniCredit  CRDI.MI , Austrian banks Raiffeisenbank
 RBIV.VI  and Erste  ERST.VI , and Hungary's OTP  OTP.BU .
    In addition, he said two banks agreed not to start legal
action, namely Privredna Banka Zagreb  PBZ.ZA , owned by Italy's
Intesa Sanpaolo  ISP.MI , and Russia's Sberbank  SBER.MM .
    Maric said the deal would improve the business climate as
banks had recognised his government's effort to create a safer
environment for international investors.
    OTP bank said the deal would prevent further costs for both
sides and Erste bank said the deal was a constructive solution.
Other banks did not immediately issue statements on the matter.
        
    ($1 = 6.2995 kuna)
    ($1 = 0.8311 euros)

 (Reporting by Igor Ilic; Editing by Edmund Blair)
 ((igor.ilic@thomsonreuters.com; +385 1 4899 970; mobile +385 98
334 053;))