Government endorses amendments to enable conversion of CHF loans into euro

The conversion will be conducted on a voluntary basis regarding borrowers who are still servicing their debts, while those who have already repaid their CHF-pegged debts are not entitled to the conversion. Small businesses and family-run farms burdened with CHF loans are also entitled to the conversion option.

 

Under the government's scheme, the lenders will have to convert the initial principal denominated in francs into euros and recalculate the repayment plans for the loan holders.

 

Proposing the plan for conversion, Finance Minister Boris Lalovac said that overpaid amounts for CHF loan holders would be used to reduce their monthly instalments in the future. The finance minister also said that "the banking sector will not be undermined, as it is one of the highest-capitalised banking systems in Europe". He assured the banks that this move would not undermine their solvency, either.

 

Lalovac described this conversion scheme as "one of the strongest measures by which we must show that it is the government rather than banks that governs Croatia."

 

Prime Minister Zoran Milanovic said that this would only be a blow to bank managers who would now have "lower bonuses and a reduction in their huge salaries". Milanovic also believes that the Opposition would see this as a measure against banks rather than perceiving this as protection of citizens.