Croatia’s Constitutional Court
on Friday rejected a request from local banks to consider
whether a law on the conversion of Swiss franc loans into euros,
aimed at protecting borrowers and implemented in late 2015, was
against the constitution.
“Such a measure was necessary at the time to achieve a
legitimate goal,” head of the court Miroslav Separovic said.
Households and firms across Croatia and eastern Europe took
out Swiss franc mortgages to benefit from low interest rates,
but were then caught out by a surge in the franc, particularly
after Switzerland scrapped its cap on the currency in January
2015.
Eight local banks asked for a constitutional assessment of
the conversion law, passed by the centre-left government at the
time, saying it did not share fairly the costs and acted
retroactively.
The ylaw forced the banks to convert the loans denominated
in Swiss francs into those denominated in euros and thus protect
borrowers from rising payments due to exchange rate movements.
The vast majority of loans in Croatia are denominated in euros.
(Reporting by Igor Ilic; Editing by Andrew Bolton)