Controversies over the conversion of loans in Swiss francs
Romanian MPs have unanimously adopted the law on converting Swiss franc loans into loans in the national currency.
Roxana Vasile, 19.10.2016, 13:18
In January 2015, many Romanians who had taken out loans in Swiss francs, discovered that the amount of their due installments had doubled, exclusively on account of the exchange rate fluctuations. At the moment, the exchange rate is 4.15 lei for a Swiss franc, as compared to 2 up to 2.5 lei for a Swiss franc as reported in 2007-2008, when many loans in this foreign currency were granted.
On Tuesday, the Romanian Chamber of Deputies, which is the decision-making forum in this matter, unanimously adopted the bill stipulating the conversion into the national currency of loans in Swiss francs, at the exchange rate valid when the loan was contracted. Initially, the bill was aimed at helping people with small incomes, who could no longer pay back their loans at the new rates.
However, the new law no longer includes the provisions regarding the 50% degree of indebtedness and the ceiling of 250,000 Swiss francs. Therefore, the current law benefits also those who contracted big loans but can afford to pay their installments. The leader of the Social Democratic Party Liviu Dragnea has said that the decision made by the Chamber of Deputies rights a wrong, and banks should rethink their approach in the relationship with their clients.
Liviu Dragnea: “We are not willing to sit and look indifferently at this ‘profit by all means’ attitude. I believe that both the bank and the client should equally assume the risks entailed.”
The Liberal deputy Daniel Zamfir has stated that the law is not aimed at ensuring social protection, but at making justice: “On the one hand, this law fixes an injustice done to these people, but also sanctions those banks that irresponsibly granted such loans.”
The law has to be promulgated by Romania’s President Klauss Iohannis, who has stated he will carefully analyze it together with experts in the field: “I will analyze the law together with my team of experts and we will also ask for the other stakeholders’ opinion. As we are talking about currency conversion, I will definitely ask for the opinion of the banking sector and, after making a complete analysis, I will make my recommendation.”
The National Bank of Romania believes that the law adopted on Tuesday discriminates against a part of the population, as it only favors the approximately 50,000 Romanians who contracted loans in Swiss francs. The law might set a dangerous precedent, because, for instance, the Romanians who have credits in Euro, and who are much more numerous than the others, might ask for the same rights, and that would create huge problems in the banking sector.
According to the Central Bank, the conversion from Swiss francs into lei would bring two banks under the level of minimum solvency, and six under the precautionary level. Moreover, the Central Bank Governor Mugur Isarescu has talked about populist moves, pointing out that the solutions provided could create euphoria among beneficiaries in the short-run, but would also trigger considerable economic costs to society in the long run. The main threat, according to Mugur Isarescu, is contractual discipline, which, under similar laws, might turn irrelevant. (translation by M Ignatescu)
