ZAGABRIA (CROATIA) (ITALPRESS) – The yearly issue of Swiss franc loans does not seem to find peace in Croatia, which at a distance of a decade questioned the previous rulings and re-proposed the issue to the National Supreme Court. By 18 May, in fact, the Court should reiterate under the pressure of the associations of citizens who have previously contracted loans indexed to the Swiss franc. A decision, that of the magistrates, which poses more than one question, given the judgments already issued over the years, and in particular that of 2020, in which the same Court had established that those who had accepted the conversion had no right to further compensation. Above all, the questions arise on the possible outcome of the new judgment, which could represent a distancing from the decisions already made by other Member States of the European Union and an approach to positions which have already raised doubts among experts in the economic and financial sector.
The issue has far-reaching roots: in different EU countries, well before the euro came, it was customary to offer loans not only in local currency, but also in dollars, yen or Swiss francs. The latter, in particular, were famous for significantly lower interest rates than Euros or Dollars and for a historic low volatility. These loans have enjoyed overwhelming popularity not only in Switzerland, but also in France, Austria, Hungary, Poland, Slovenia and Croatia.
With sometimes halved interest rates compared to the euro, many savers were attracted by immediate savings. However, the idyll broke with the global financial crisis of 2008/2009: the depreciation of the euro compared to the franc made the monthly installments, transforming those that were ‘conveniences’ loans into a financial trap. To address the question,
Countries such as France and Austria have chosen, in the past years, the way of legal rigour, allowing the parties to join the bilateral agreements signed. Others, like Viktor Orban’s Hungary, have taken different paths. For example, Budapest has imposed a tripartite solution: the costs of the appreciation of the franc have been divided into equal parts between borrowers, banks and the State, converting the debt into florins, the local currency. The Croatian route has been rather ‘excited’, considering the amount of times that has been repeated to public opinion and judicial institutions.
The first response given in chronological terms by the government was to say a little ‘muscular’: in 2014 the majority of the centre left a law imposed on banks the forced conversion of all loans in Swiss francs to euro, with retroactive recalculation starting from the moment of delivery (starting between 2004 and 2007).
The move thus unloaded the entire exchange risk on the banking sector, and then translated into an immediate loss of approximately 1.1 billion euros. Behind this drastic measure the shadow of Alex Brown, known as political spin doctor, would have been concealed: the operation would have been part of a populist strategy aimed at intercepting, in view of the elections, the consent of about 30,000 Swiss franc mortgage holders. The political calculation, however, failed: then premier Zoran Milanovic lost the election, leaving the banks with a billionaire hole. The banking sector, feeling ill, reacted by launching international arbitrations against the Zagreb government.
The response of the Ministry of Finance was not expected, even with threats of new tax reliefs, disguised as a supposed ‘gentleman’s agreement’ to avoid further restrictive measures. The only one not to retract was at that time the French Société Générale, which continued the dispute despite the sale of its Croatian branch in Otp. The decision of the Icsid (the International Centre for the settlement of investment disputes, an agency of the World Bank based in Washington acting as an arbitral tribunal between foreign investors and states) finally gave reason to the French institution, condemning Croatia to a compensation of over 20 million euros.
Considering the limited exposure of Société Générale compared to other colossi present in the country, it has been calculated that the overall risk for Croatian cases, in the case of arbitral losses to all actors present in the banking market, could exceed the billion euros. This is also due to the peculiarity of the Croatian banking system, which presents a backbone made by a number of important foreign names, which in particular involve some ‘homes’ such as Austria and Italy.
This is why the country, which made its entry into the EU in 2013, is today likely to move away from the practices of most European states by returning to a question that seemed finally closed. The issue is likely to open questions on the very meaning of being part of a political and economic group like the European Union, and in particular its banking union, i.e. the policy for the integration of the sector between the Member States of the euro area.
The banking union is a fundamental step towards the achievement of the EU’s economic and monetary union and Croatia joined it on October 1, 2020, before the adoption of the euro in 2023. Member States which are not part of the euro zone, in fact, have the opportunity to join the banking union by establishing close collaboration with the European Central Bank (Bce). This allows them to participate in the mechanisms of supervision and resolution of the banking union without adopting the euro.
Another question arises on the OECD (Organisation for Economic Cooperation and Development), whose accession Zagreb has been aspiring for years. Croatia has set itself the strategic goal of becoming an effective member of the OECD by 2026 and the application entails adaptation to high standards in areas such as governance, taxation and the fight against corruption. However, the Swiss francs are likely to become an obstacle of not little account, even in the light of a question that arises spontaneously: what certainty can a country offer, where, twenty years after a loan is provided, the financial institutions do not yet know the final cost of their operations?
In the past few weeks media speculations have also come to complicate the picture. According to Site 24Sata, Judge Jadranko Jug may be the rapporteur in the Supreme Court ruling. Jug is already subject to a request for recusal in Swiss franc loans cases, the article states, since his son Boris, as a lawyer, had represented the applicants in some disputes against the banks. In this regard, a number of more than 400 cases is estimated for a profit, taken from the legal services, amounting to approximately 1,8 million euros.
The situation around the current judicial case of Swiss francs is aggravated by an institutional vacuum: since the disappearance of the previous president of the Supreme Court in March 2025, Croatia is in fact deprived of a judicial guide, due to the political stalemate between the Prime Minister, Andrej Plenkovic, and the President of the Republic, Zoran Milanovic (the same as in 2014, the year of the first decisions on Swiss franc loans, was premier).
In this climate, consumers’ associations, and in particular Franak (a word that in Croatian means ‘French’), exert strong media pressure, praising the judges favorable to debtors and attacking those close to the positions of credit institutions. And in this context, Croatia is likely to repeat the mistake of the past and seek an easy grip on public opinion, in view of the forthcoming parliamentary elections scheduled for the end of April 2028.
The polls see today the party to the government, the Croatian Democratic Union (Hdz) of Prime Minister Plenkovic, in the lead with about 34 percent of the preferences, followed by the Social Democratic Party of Croatia (Sdp), the force of President Zoran Milanovic, with about 25 percent. Two opposing forces, which would therefore not be able to conquer, according to current data, the majority in parliament.
The case of Swiss franc loans is therefore likely to be dragged back into the midst of political battle as an unlikely need for the balance, leaving serious doubts about the fact that it is really a European approach to a problem involving, and not little, European investors.
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