The Croatian National Bank (HNB) is closely monitoring talks between the government and commercial banks aimed at cushioning the consequences of the appreciation of the Swiss franc for the users of housing and car loans pegged to the franc and should they result in a transparent model for the resolving of this problem, the central bank will voice its opinion and possibly actively join its implementation, in accordance with its powers.
This was the central bank's response when asked about the HNB's position on the current proposals for cushioning the consequences of the appreciation of the franc for the users of loans tied to the Swiss currency.
According to the HNB figures from March 2011, nearly HRK 30 billion of loans taken by Croatian citizens are pegged to the Swiss currency. More than 42 percent of housing loans and 47 percent of loans for cars are pegged to the Swiss franc.
Prompted by the record-high appreciation of the franc and increases in instalments of housing and other loans pegged to the Swiss currency , the Croatian government last week presented a model according to which instalments should be fixed in kunas according to a fixed exchange rate of 5.8 kuna or less for one Swiss franc, and the difference in the annuity between the actual rate and the proposed rate is treated by the banks as a deferred, interest-free claim.
Such claims would be deferred for ten years, by which time it was realistic to expect changes to the Swiss franc exchange rate that would nullify the exchange rate differences
The .government was seeking a reduction of interest rates on Swiss franc-pegged loans to levels at which the loans were originally approved.
Prime Minister Jadranka Kosor said she believed that the government would sign a memorandum with the banks regarding its request after August 15. "I believe everyone will sign, and if some won't, we have other instruments we are ready to use," she added.
In the meantime, a meeting with banking representatives were held in the Finance Ministry last week, while this week, bankers met behind closed doors. Not officials statements were given.
Unofficially, according to some media, banks could agree to the fixed exchange rate of HRK 5.8, but the difference in the annuity between the actual rate and the proposed rate is treated by the banks as a deferred with the interest rate the same as the loan interest rate. Such claims would be deferred not for ten years, but for three to five years.
The Croatian Banking Association (HUB) last week welcomed the government's initiative to adopt additional measures to deal with problems with loan repayment which are affecting citizens who have taken loans pegged to the Swiss franc, but it believes that the proposed model should be elaborated and underlines that banks are not making a profit from increases in the franc exchange rate. HUB welcomed the government's proposal, noting however that its implementation should be elaborated because its present form was dubious in terms of relevant laws and regulations and did not take into account the profile of loan beneficiaries or the equality of bank clients who have taken loans pegged to other currencies.
HUB said the government's request that its model be applied already to loan instalments for August did not leave any time to carry out the request in line with laws regulating the matter.
According to the Croatian National Bank's exchange rate list on Tuesday, the midpoint exchange rate of the national currency against the Swiss franc was 7.045071 kuna against one franc.
