National Assembly passes controversial Swiss franc loan bill
Ljubljana, 2 February - The National Assembly passed on Wednesday an act that distributes the cost of the surge in the value of the Swiss franc in 2015 between banks and some 32,000 borrowers who saw the cost of their debt in euros increase as a result. The act has been opposed the government and by banks, which have already announced a constitutional appeal.
The act applies to all Swiss loan credit agreements signed between 28 June 2004 and 31 December 2010, including those that have been paid off. It caps change in the value of the franc, and the cap needs to be included in annexes to the credit contracts within 60 days after the law took effect.
The proposal was prepared by the Franc Association of the affected borrowers and filed by the National Council, after the National Assembly rejected in October 2019 a proposal by the upper chamber that envisaged conversion to loans in euros.
The Franc Association has been constantly advocating a systemic solution to the issue, while the Bank Association, which has come out strongly against the act, has advocated that the issue be treated on a case-by-case basis.
During Tuesday's debate in the National Assembly, National Council president Alojz Kovšca disagreed with the banks' arguments that the act was in contravention of the constitution or EU law, for one thing because of its retroactive effect.
He argued it was impossible for courts to tackle the issue case by case due to a lack of a single case law and long and costly procedures, and rejected the banks' argument that the act would be unfeasible because they no longer kept the agreements or data.
The confirmation of the act comes a day after the Constitutional Court said it had annulled rulings by two courts that rejected borrowers' request for annulment of contracts on loans in Swiss francs and for a refund of overpayments.
It has found that the rulings did not adequately address the concerns regarding the assessment of the standard of banks' duty of disclosure and that of fairness, and has returned the cases for reconsideration.
The Bank Association said in a response that the court had not come to the conclusion that contracts on loans in Swiss francs were null and void, adding that the procedural reasons noted by the court referred to relevant courts and not to banks.
Although banks argued that the act is not feasible, as data is kept for 10 years due to legislative restrictions, which means that there was no data for loan contracts repaid before 2012, the act was passed with 52 votes for and eight against.
It was endorsed by the deputy groups of the ruling Democrats (SDS) and opposition National Party (SNS) and Left, and part of MPs from the deputy groups of New Slovenia (NSi), Pensioners' Party (DeSUS) and Marjan Šarec List (LMŠ).
Karmen Kozmus Ferjan of the SDS said that "we don't want the burden of payment to fall on the shoulders of taxpayers, which will happen if the European Court happens to decide on this," and Jani Ivanuša of the SNS said he "prefers people to banks".
Luka Mesec of the Left said that the question was whether people who had fallen victims to machinations by banks, or private banks that made money at their expense, would be rescued.
"It is difficult to understand that banks should not be held accountable for aggressively marketing their products as a tool for increasing the applicant's creditworthiness," added Soniboj Knežak of the SD.
Marko Bandelli of the opposition Alenka Bratušek Party (SAB) believes that banks that have not fulfilled their duty of disclosure must be held accountable, and that decisions on this should be left to courts.
This position is similar to that of the government, which has opposed the act and disagreed with the notion that banks had put all borrowers in an unequal position.
The government says that the act encroached on the civil law relationships between banks and borrowers, and warns against the retroactive effect of the act, while also noting that there are no analyses of the possible consequences for the economy.
The Left had failed with its proposal that the exchange rate cap be activated when due to a change in the value of currency the remaining loan or instalment is more than 5% above the amount calculated at the rate as of the first day of tapping the loan.
This is in line with the original proposal, however the threshold was raised to 10% on the relevant committee and kept as such.
The Bank Association, which has also argued that the penalties stipulated by the act could result in a majority of banks in the Slovenian market being stripped of their licences, issued another call against the act today.
It said that the act would disproportionately benefit several hundred people, while the effect for the remaining two million would be very negative. "We believe that the consequences of the act would have long-term negative consequences."
Stanislava Zadravec Caprirolo, the head of the association, said that the act was "an insult to all those who in the past conservatively decided to borrow in the local currency or euros, even though it was more expensive for them."
The association has assessed that the total costs for the banks would exceed the estimated EUR 300 million, and that banks should consider taking measures to compensate for these costs.
"This would certainly mean less loans for housing or goods or higher prices for financial services. This would definitely have negative consequences for families, entrepreneurs, banks and the whole economy," the association added.
AmCham Slovenia also issued a statement prior to the vote, saying that the act would signal the international public that the legislator in Slovenia could intervene in any valid agreement, which would create an unpredictable business environment.
The chamber added that the act would bring harmful consequences for investments in Slovenia and undermine the country's international status due to non-compliance with EU principles and unpredictability of the business environment.