Class Actions for Loans in CHF
In the 2006-2009 period when the EUR/CHF exchange rate was very favourable (around 1.60) banks deliberately directed tens of thousands of Greek borrowers to take out mortgage loans in CHF or to convert existing EUR-denominated loans into CHF. The Bank’s argument was that converting the loan currency would prove particularly favourable for the borrower, ensuring a lower interest rate (LIBOR) and so lower monthly instalments.
In fact, at that time around 60,000-70,000 Greeks did take out mortgage loans in CHF following the exhortations of bank staff, in the belief that the currency conversion clause was normal practice, and did not entail risks to their interests.
However, the banks concealed from the borrowers the fact that the loan currency conversion entailed the FX risk being shifted to them. So when the euro began to fall against the CHF in 2010 and the exchange rate was below 1.50 –today in fact it is 0.98– borrowers found themselves faced with an irrational situation: even if they had been consistently paying their monthly instalments over the entire term of their loan, currently they find themselves owing a figure which is around 35-40% higher than the figure they originally borrowed!!
Our firm undertook to defend the borrowers’ interests filing litigation which primarily sought to annul the contractual terms that shifted the FX risk onto the bank’s clients. Acceptance of our requests means that the loan instalments and the outstanding capital will be calculated retroactively at the EUR/CHF exchange rate favourable to the borrowers, namely the capital owed will be reduced by at least 30-40% and the remaining instalments to the loan matures will be adjusted accordingly.
Given that no bank has shown itself willing to resolve the problem which has arisen, despite the political turmoil and concern among a large number of borrowers, the only solution for borrowers with CHF-denominated loans was to contest their debts before the courts. It should be noted that the first favourable judgments have already been handed down by various Greek courts and by the Court of Justice of the European Union.