Romania eyes loans conversion into national currency

Romania eyes loans conversion into national currency

Bucharest, March 18, 2015/ Independent Balkan News Agency

By Daniel Stroe

The Romanian Government has today discussed a bill which envisages converting bank loans in foreign currencies taken by individuals into the national currency, amid a vivid debate sparked by the sudden appreciation of the Swiss Franc which drew the ire of part of the population.

The measure, which was tabled for the first time today, concerns bank loans in foreign currencies which have so far appreciated by more than 50% compared to the rate when they were contracted. If the conversion is made, the bank will give the customer a 15 per cent discount of the final value while the state will ensure financial guarantees for 50% of the sum.

Sources quoted by the national news wire Agerpres say banks agree with this project, but it still needs the green light of the National Bank. The Government is expected to discuss the project in the next governmental meetings.

As officials endeavor to seek solutions to bank loans in foreign currencies, the National Consumer’s Protection Agency announced today it reviewed 176 out of the total 240 complaints filed after the sudden appreciation of the Swiss Franc and it would forward the examined files to courts across the country. Most of the complaints concern the manner in which the banks calculated the interest rates, hidden commissions or penalties which customers deemed illegal.

The head of the agency recommends banks to come up with solutions for those customers affected by the sudden appreciation of the Swiss Franc and fix those abusive provisions in the contracts. If the court finds irregularities in contracts, then the final decision will apply to all those customers who signed the same type of contract and banks risks an up to 50,000 lei (11,000 Euros) fine for each case.

Last month, lawmakers discussed another bill on personal insolvency. The draft law, which was tacitly approved by the Romanian Senate, says debtors can ask themselves for insolvency under certain circumstances, but such a request can also be submitted by creditors. The text suspends all the foreclosures and forbids a bank to apply penalties to a faulty client. But the bill further says a person who is declared insolvent has to report all the expenses to a judiciary administrator who can veto transactions and the manner the income of the debtor is spent.

About 100,000 Romanians have bank loans in Swiss Francs, about a quarter of these contracts having been ceded to companies outside Romania. Most of the loans were given in 2006-2008 when the Swiss Franc-leu rate was 1.8 – 2.1 to 1. Today’s exchange rate is 4.17 lei for a Swiss Franc.