Lasting measures for CHF loans to cost banks over EUR 667m, says deputy PM Grcic

Speaking to Hina, Grcic said the government's motion would lead to a lasting solution to CHF-pegged loans, as two provisional measures were being applied now - one introduced last year, on reducing interest on those loans to 3.23 percent, and one introduced in January, on freezing the exchange rate to HRK 6.39 for CHF 1. "It's absurd that after eight or nine years of repaying CHF-pegged loans, the principal is higher than at the time they contracted the loans. It's therefore crucial to help those people."

 

Grcic said the government had given banks some time to find a solution directly with the clients in question but, since that did not happen, it made "a very strong political decision to pursue a lasting solution model... This model aims to fully equate debtors in Swiss francs with those who have loans in euros. This eliminates the problem of the impact of extreme growth of the CHF exchange rate on the increase of the principal and the total amount of the repayment necessary for Swiss-pegged loans. In the coming period, they are equated in the repayment of the rest of their debt with individuals indebted in euros."

 

The difference created in the past period will be written off, meaning the principal will be reduced, and the cost of the reduction will be borne by banks, Grcic said, adding that banks would be able to use this as a tax break.

 

He said CHF-pegged loans were worth HRK 23 billion. He said the government measures would refer to all such loans, of which more than 90 percent are housing loans.

 

Starting in October, the government will adopt all the necessary acts to implement a lasting solution to the problem, Grcic said. "The temporary measures would go out of force by year's end and banks could include part of the write-offs in tax breaks for this year."

(Text & foto: HINA)