ISSN 2330-717X

Croatia’s Swiss Franc Loan Trap


By Natasa Radic

Croatian borrowers have been in upheaval for the last month over their Swiss franc loans. Many have lost homes and possessions due to the fluctuation in the exchange rate between the two currencies.

Funds borrowed five years ago in Swiss francs, mostly for cars and real estate, today have a much higher repayment figure.

The regular repayment of Swiss franc loans over time became a nightmare as the franc rose against the kuna. Monthly loan payments started rising rapidly.

A repayment for a 100,000-euro loan increased by 150 euros per month as a result of currency changes between the kuna, euro and Swiss franc. On August 2nd, the Swiss franc reached a record level of 6.7 Croatian kuna.

Marija L., a schoolteacher from Zagreb who took out a bank loan in Swiss francs a few years ago to buy a flat in the Zagreb suburbs, told SETimes that she is considering joining the citizens group called Franak, which is forming to do something about the problem.


“I just keep watching the exchange rates every single day and fear the day of the month when I need to pay my loan installment,” Marija said.

According to the Croatian National Bank, 25% of loans borrowed from Croatian banks are pegged to the Swiss franc.

Economy analyst Damir Novotny told SETimes that the Croatian National Bank initially warned borrowers, although somewhat mildly.

“They spoke about the risks, but the commercial banks did not warn the loan borrowers clearly enough; they lured them to take the credit. So now we have a situation [in which] a number of Croatian households cannot repay their loans, and this has serious repercussions. I have not heard a single acceptable solution [to the problem],” Novotny said.

Prime Minister Jadranka Kosor has said that the banks will either lower the interest rate for housing loans tied to Swiss francs and related exchange rates, or be taxed.

The government decided to actively address the problem because the troublesome franc became a hot political issue this election year.

Zdeslav Santic, the Splitska Banka chief economy analyst, told SETimes he expects the Swiss franc to stop rising and balance out with the euro, reducing the monthly repayment for Croatian borrowers. He said that people who took the loans in Swiss francs were more or less aware of the risks.

Croatia’s Bank Association representatives claim that by facilitating the repayment of Swiss loans, those who are regularly paying off debts pegged to other currencies face discrimination.

According to Croatia’s daily Vecernji list, 4,000 citizens are bankrupt, unable to repay their loans. More than 3,000 took out loans pegged to the Swiss franc; others took loans in euros.

“Nobody forced these people to take loans in Swiss francs. They wanted to profit on a short term basis by paying less for their loans than others. Now they want the government to help. Why? Why should the others, who took loans in other currencies, be discriminated against in this matter?” Zelimir A. from Zagreb, told SETimes.

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