Romania

In Romania there are 2 Associations that defend the rights of financial users. Both are specialised in FX Loans.

FX LOANS IN ROMANIA – FACTS

Information given by Parakletos and Credere.

When FX loans were sold in ROMANIA? Who was the target?

Credere. The loans were granted between 2006-2008. The target of these loans was the low and middle class of the romanian society, most of them could not afford a loan in the national currency due to high interest rates that were more than triple in comparison with the ones applied to a swiss francs loan. Parakletos. Target → people; perhaps few loans were sold also to the companies but 99% of them were taken by physical persons.

Which banks offer or have been offering FX loans?

Parakletos. The FX loans were offered by subsidiairies/branches of foreign banks. 14 banks have in their portfolio FX loans but among them 95% are concentrated on 6 banks: 32% Bancpost (subsidiary of a Greek bank – Eurobank Ergasias SA), 24% Volksbank (subsidiary of Volksbank Austria, Österreichische Volksbanken – AG (ÖVAG)), 20% Piraeus Bank (subsidiary of a Greek bank – Piraeus Bank Greece), 11% Raiffeisen (subsidiary of Austrian Bank Raiffeisen – Raiffeisen Bank International AG (RBI)), 7% Banca Romaneasca (subsidiary of a Greek bank – National Bank of Greece) and 2% OPT (subsidiary of Hungarian bank – OTP Bank Hungary). Thus the main percentage of FX loans is held by Greek and Austrian banks. A mention for OTP – they sold 90% of their portfolio of FX loans to OTP Hungary and OPT Holand, thus those loans don’t appear anymore on Romanian statistics even the debtors are Romanian citizens. Credere. The FX loans were granted by the subsidiaries of foreign banks in Romania: Volksbank (the subsidiary of Volksbank Austria AG which was purchased by Banca Transilvania S.A. in late 2015), Bancpost (the subsidiary of Eurobank Ergasias S.A. from Greece which was purchased by Banca Transilvania in 2018), Raiffeisen Bank (the subsidiary of Raiffeisen Bank International AG), Credit Europe (the subsidiary of Credit Europe Bank NV), Piraeus Bank (the subsidiary of Piraeus Bank Group from Greece which was purchased by the private investment firm J.C. Flowers in late 2018 and changed its name into First Bank starting with 1st october 2018), OTP Bank (the subsidiary of OTP Bank Hungary), Banca Românească (the subsidiary of The National Bank of Greece), Millenium Bank (the subsidiary of Millenium BCP from Portugal which was purchased by OTP Bank in 2014) and Garanti Bank (the subsidiary of Turkiye Garanti Bankasi AS from Turkey).

When and why would people in Romania take FX loans rather than loans in euros?

Parakletos.The people from Romania take FX loans rather than loans in euros because the interest rate was lower than for loans in EURO or local currency LEI. For example a loan at Volksbank in 2007 has an interest of 3,99% or 4,25% for CHF; in EURO was sold with an interest as 5,95% and for LEI the interest was around 12%. A consequence of a lower interest was that a certain category of people did not qualify for EUR, LEI loans as their debt grade was greater that 70% (the maximum debt grade for loans from 2006-2008) and thus the only options for them remains a FX loan. Another reason was that all banks sold those loans as a stable ones and presented to the debtors CHF as the most stable currency from the world.

Were people informed about the risk when they took these loans?

Parakletos. No information about risks was provided. Moreover as I stated before CHF currency was presented as the most stable from the world. Credere. People have been misinformed. For example, Raiffeisen Bank in its flyers promoted CHF as „the most stable currency”. Another flyer from OTP Bank contained a garbled graphic with the evolution of CHF-LEU exchange rate in order to emphasize the false stability.

In which currencies are the loans mostly indexed?

Parakletos. CHF → 75.000 debtors according to National Bank of Romania (BNR), 8% from total number of credits (according to our estimations the percentage is higher as some loans were sold to other entities); were sold also few credits in JPY (Less than 0,5% of total credit portfolio, most of them were closed or refinanced. Credere. CHF and JPY. According to the data provided by the National Bank of Romania (BNR) in late 2018, the number of consumers with CHF loans is over 20.000, but we think that this data might not be accurate due to the fact that some banks transferred loans to their parent company (for example, before being purchased by Banca Transilvania, Bancpost transferred an unknown number of loans to the parent company – Eurobank Ergasias S.A. from Greece, and at this moment those loans are managed in Romania by First Bank S.A.). Also, few JPY loans were granted between 2006-2008, but we do not have the updated data in order to provide the remaining number of these loans.

What happened when consumers took banks to court for the FX loans?

Parakletos. There are 2 individual cases won by the clients:

1. 4831/121/2014 – Galati Court
2. 1730/114/2014- Buzau Court

In these causes the justice decided that the loan should be denominated (reimbursed at the course of CHF from the according date – approximately 2 lei/CHF; Now the course is 4,2 lei/CHF thus the costs increased more that 100%) There are any others causes which are in progress. Unfortunately there are some causes won by the banks so for the moment there is no unitary practice in Romania related to these causes. Unfortunately in Romania the government decided to do nothing regarding this problem and asked banks to negotiate individually with affected people. We hope that for the future the government will be inspired by the actions  taken by other country (like Hungary for example) in order to protect their population by these toxic loans that doubled the financial effort for families in just 5 or 6 years. Credere. Unfortunately, even after Andriciuc case C-186/16 from the European Court of Justice, the judiciary practice in Romania hasn’t improved at all, more than 90% of the trials regarding the currency clause being won by the banks due to a old principle from the Civil Code of Romania from 1864. Nonetheless, hundreds of trials were won by the consumers and the courts decided that the credit agreement should be repayed by the consumer at the exchage rate applied at the moment the loan was granted (almost 2 LEI/CHF, half than the actual exchange rate which is 4.2 LEI/CHF). The consumers from Romania are awaiting for the decision in case law C-81/19, therefore the courts are currently suspending all the trials until the European Court of Justice will announce its decision.

MORE ABOUT PARAKLETOS CONSUMERS ASSOCIATION

PARAKLETOS is a Romanian nonprofit consumer association that was founded in 2014 and now it has around 4200 members.

The aim of the organization is to protect and promote the rights and interests of the consumers inside and outside the country. The association fights against economical abuses which manifests especially by the abusive clauses inserted in the contracts between consumers and economical entities.

On short term Parakletos intent to eliminate all abusive clauses from banking contracts intervening in the court clauses opened between ANPC (National Authority for Consumers Protection) and eleven Romanian banks.

On medium and long term, the Association will start a network of at least 10 branches in different districts in order to formulate actions in justice according to articles 12 and 13 from Law 193/2000 which permits to consumers associations to begin court cases in order to eliminate abusive clauses from all contracts of all consumers.

Other purpose of the association is to educate from financial point of view the population in order to protect citizen interests and rights.

The association was an initiative of Gheorghe Piperea, lawyer and professor in law which is its president. The members of the board of the association are: Ana-Maria Masoud, Beatrice Aldea, Ilie Balasoiu and Bogdan Constantin Istrate.

MORE ABOUT CREDERE ASSOCIATION

Credere was established in 2018 at the initiative of the leaders from the Group of Clients with Swiss Francs Loans, a group formed on facebook in 2015 with over 23,000 borrowers who continue to have financial problems after the conclusion of the credit agreements between 2006-2009. The personal experience with the banking industry, as well as the experience gained in more than 8 years of legal and social actions, have determined them to adopt a legal form in order to ensure the necessary guidance for the consumers and to improve the legislation by proposing solutions that should protect the consumer rights. The founding members of Credere were in the Romanian Parliament when the first european directive regarding the consumer loans was transposed into national law in 2010 (2008/48/EC), they have supported the adoption of the datio in solutum law in 2016 and drafted amendments for the implementation of european directive 2014/17/EU. Besides guidance and legislative involvement, we aim to implement financial education projects and to organize different types of conferences that provide consumers with all the informations they need to act and fight for their rights. The founding members of Credere have master degrees in law and economics.