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If you are not in the euro, which is one of the suggested model solutions in the region, suggest the conversion of loans in national currency
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Dusan Uzelac believes that the conversion of loans in domestic currency for Serbian citizens was the best solution, but “someone would have to pay the price of such a decision”.
For 683 Montenegrins, borrower-related Swiss franc , arrived relief – The Parliament of Montenegro adopted the Law on the conversion of the loan, which will be their obligations converted into euro on the day of conclusion of the contract and a fixed interest rate of 8.2 percent. The burden of foreign exchange losses in the same proportion will share the borrower, the bank and the state.
Since this is only one banking institution that has given such loans, and that’s Hypo Alpe Adria Bank, she was given 30 days to convert all loans by binding them to the euro, rather than the Swiss franc, and 45 days to customer delivery new contracts.
This fall would credit charge citizens, who are due to changes in exchange rates of the franc get enormously increased monthly rate, should finally relieved when they get the first installment of the new model. Although their interest rates twice more, in the long term loans reobračunatim see salvation.
Euro that, but with lower interest rates
Although the euro is, in fact, the domestic currency in Montenegro, the news from Podgorica were watching in the region because the borrowers of Swiss franc in Bosnia and Herzegovina, Croatia and Serbia have been fighting for years to facilitate the repayment of its obligations to banks. If you are not in the euro, which is one of the proposed models is proposed conversion of loans in national currency.
Croatia is a country where talk of converting the loan rate, or better know the situation warn that it ‘ate’ currency reserves. Therefore, as one of the possible solutions mentioned in the conversion of loans tied to the euro, reducing the principal and up to 25 percent, in line with the decline in real estate prices, as well as “cost sharing” between the state and banks.
Commenting on the “Montenegrin model”, in Zagreb say that this is to be expected, because very few users, so the state, and banks, but also for users to agree to the division of the burden of conversion loans.
“In Croatia, would such a solution be applicable, or in accordance with interest what are with us, and not what are in Montenegro. If the uu Croatia applied five percent fixed interest and took equity as it was in the beginning, and so paid out by the end of the loan, it would be acceptable. Another solution is to convert the loan in kuna with an annual interest of six per cent, “said Goran Aleksic, one of the most ardent fighters against the loan” in the Swiss “and participant in the development of a collective lawsuit against the Croatian banks.
“However, I do not believe that it is in Croatia as possible, because it means the bank does write off at least two billion kuna (265 million euros) of debt. Banks will have to fight arms and legs to prevent it, “he adds.
What if the franc starts to grow again?
And in Serbia a large number of people in charge of the loans related to the franc. But the responsibility on the financial portal kamatica.com not recommend applying such a solution in Serbia.
“I would not advise convert into another currency, since it can only be the euro, whose long-term perspective is strengthening, while the perspective of the Swiss franc weakening. Since the citizens at this moment mainly responsible for 15 or more years, the council is that at this moment nothing changed but the developing situation, “says Dusan Uzelac.
He believes that the conversion of loans in domestic currency for Serbian citizens was the best solution, but “someone would have to pay the price of such a decision”.
“Taking into account that in Serbia higher volume charge in Swiss francs, it also means that the decision costs money and money, and political readiness and therefore there are no indications that this problem could be solved in this way in Serbia”, indicates.
Denis Perinčić of the Republican Union of Consumers of Serbia returns to the beginning of the story, recalling how the bank once gave loans in dinars obtained from the profits, and not in France, “as it misrepresents the public”. In this sense, explains the concept of “moral hazard” after which the situation in which they now find credit charge “a result of failure to provide complete information to the consumer, and the risks to which they are exposed.” He claims that the banks knew that the franc “enormous growth, and low interest rates are just the bait.”
“Banks have earned as the effects of currency, and the one-sided boot interest rates. They knew or should have known that there will be a jump ‘Swiss’, only the question whether the low rate of interest to be sufficient to Franc in the long run be defeated. Today we can see that low interest rate was not enough to neutralize the jump Swiss against the euro, “recalls Perinčić.
It warns that a “swiss jump, because it is inevitable, the only question is how it will be.” “If any of us 7-8 years ago euro replaced the franc, not bought an apartment, and put that money into savings, today would be a rich man. Thus, they embarked on risk taking loans in the currency of not earning and payment in local currency, “recalls.
When the state interferes
The existence of the so-called. currency clauses in contracts is not unheard of, indicates Jafar Alibegović from the Economics Faculty in Sarajevo, but considers its contracting in countries with currency exchange rate stability (convertible mark is related to the euro, Montenegro already has the euro and the kuna and the US have a relatively a stable exchange rate) “is questionable from the standpoint of both parties of the risks. Currency which is making “protection” was franc continues, but did not mind future customers because they attract lower nominal interest rates.
When the exchange rate of the franc “liberated”, this is the currency rose against the euro, and with it the monthly annuity repayment of the loan, so users are trying to find a solution with the banks, but it is the state.
“I did not see any of the countries trying to solve the problem of eliminating the cause (examination of the validity of foreign currency clause in terms of stability of the national currency and control of the implementation of the application of floating rate loans), taking into account the fact that the earnings of banks in lending to the population should be from ‘ speculative ‘sources, but from the interest. On the contrary, all the solutions are directed towards alleviating the consequences, and mitigation pressure borrowers suffer. And there is no good solution. Whenever the country ‘get involved’ in the arbitration between two parties (and the money of other taxpayers), someone will come out dissatisfied, “warns Alibegović.
For the problem of indebted citizens conclusively deemed it best that “borrowers and banks to find a solution to their communication – banks, giving up part of the salary for which I assume that they are not wanted; citizens, accepting that they made a wrong decision and that for that mistake must pay. “
Source: Al Jazeera , By Mladen Obrenovic
