Slovenian court canceled a Swiss franc mortgage loan because the borrower was not aware of the high risks in dealing with this currency. The decision puts at risk loans in Swiss francs totaling 524 million EUR in Slovenian banks and may have repercussions in other countries in Europe.
The households and businesses in Slovenia and other parts of Europe borrowed Swiss-denominated loans, mainly between 2004 and 2008, to take advantage of low interest rates. But their repayment later became more expensive because of a jump in the Swiss franc exchange rate, largely after Switzerland lifted the ceiling on its currency in January 2015.
“This is a resolute judgment. This is the first such judgment in Slovenia and one of the first in the European Union”, said lawyer Robert Preininger. “The main reason for the decision is that banks were aware of the high risks, but they did not inform the clients because they wanted to take advantage of the situation, which is a very immoral business practice”, added he.
According to the court’s decision, the borrower must pay the Slovenian branch of the Austrian bank Sparkasse only the value of the loan without any interest.
This means that the total amount will be at least 60% less than it would have been if the contract had not been canceled.