Loan rescheduling and bank-specific conversion and appreciation offsetting programs are two solutions to the issue of Swiss Franc loan holders, identified at the January 16 emergency meeting of Finance Minister Darius Valcov with the National Bank of Romania (BNR) Governor Mugur Isarescu and other leaders of Romania’s central bank.
Prime Minister Victor Ponta on Friday asked the Minister of Finance Darius Valcov and the central bank Governor Mugur Isarescu to discuss about the Swiss Franc’s massive surge this week and to find solutions for those CHF loan holders who encounter difficulties in paying their debts and monthly installments because of exchange rate fluctuations.
Romania’s union of banking clients appealed to the government to pass a law to protect people with franc-denominated debts, proposing a limit on the growth of debt repayment installments to 20 percent, writes dw.de.
According to Valcov quoted by Agerpres, a precise analysis has shown that there are 75,412 such individual loan holders, and not 150,000 as it has been circulated, and six banks that account for more than 90 percent of the entire portfolio of such loans.
“A certain bank that accounts for a considerable share of the aggregate Swiss franc loans has a program of its own and will proceed to the conversion of the loans into euro or lei – depending on the customer’s request – and will then apply a discount to substantially reduce the rise of the Swiss franc or even fully offset it”, the Finance Minister declared at the end of the meeting at the central bank headquarters.
The official also mentioned loan rescheduling according to Ordinance No. 64 of July 2014 as a solution which would address some 51 percent of the situations; he added that the scope of the normative act could be broadened to include as many as possible such borrowers.
“We had a highly useful discussion at the BNR headquarters, and we will continue talks next week. We are trying to identify in the first place where we stand and then see what solutions we have at hand to address in the longer term the issue for as many as possible holders of Swiss franc loans,” Valcov said.
“A solution to this issue is in place since last July, when according to Ordinance No. 46/2014, the Government approved and supported the rescheduling of the loans of the individuals with incomes below a certain limit. This Ordinance will be referred to Parliament for its scope to be broadened to cover as many as possible of the 75,000 persons who need such rescheduling,” Valcov added.
Following the decision of Switzerland’s central bank to end this Thursday its bid to artificially hold down the value of its currency, the Swiss franc’s official exchange rate increased 2.2 percent on Friday to 4.4228 lei/CHF, hitting a new high, whilst the euro advanced from 4.5034 lei to 4.5095 lei, and the US dollar also reached a high at 3.8863 lei.
OTP Bank offers relief for CHF loan holders in Romania
The Romanian subsidiary of OTP Bank, Hungary’s largest lender, has announced on Friday that in response to the unexpected removal of the EURCHF floor by the Swiss National Bank (SNB) on Thursday it is offering relief for the holders of CHF loans in a bid to mitigate the impact on their monthly installments, writes portfolio.hu.
“[…] starting from January 16, 2015, clients will benefit from an up to 1.5 percentage points temporary decrease of the interest rate margin for their CHF loans with variable interest rate, based on the loan history and the applied loan conditions analysis, for a three-months period,” OTP Bank Romania said in a statement on Friday.
“Clients may apply for this facility at the unit where they had initially signed their loan contract until 27 February,” reads the statement.
OTP Bank Romania said it would “constantly analyse” market developments, assuring its clients that it will try to “always find the proper tailor-made solutions”, in order to support them in such unexpected situations.
“The recent events that led to a record appreciation of the Swiss Franc determined us to quickly react and adopt a fast solution for our clients that have contracted loans in this currency,” commented László Diósi, CEO of OTP Bank Romania, quoted by portfolio.hu.
He said the bank’s efforts are aimed at protecting its customers from the consequences of this volatile economic environment.
He said that the bank will “come up with further solutions, if needed”, in view of market developments.