NBS takes decision on repayment of Swiss franc loans

NBS takes decision on repayment of Swiss franc loans

Banks will have to offer their clients the option to convert Swiss franc-indexed housing loans to euro-denominated loans, the National Bank of Serbia (NBS) has said in a statement.

The NBS has offered four models of converting the Swiss franc-indexed loans - under one of the models, banks will have to offer the option to convert these loans to euro-denominated loans at an exchange rate lower by five percent and extend the repayment period by five years, the statement said.

The decision has been taken in order to preserve and boost the stability of Serbia's financial system, ensure a more adequate management of banking risks and better protect the customers of financial services who are primarily hit by the negative consequences of trends on international foreign exchange markets.

The decision ensures a systemic approach to solving the complex issue of currency-indexed housing loans, the NBS said.

The central bank believes that the adopted solutions create the prerequisites and incentives - mandatory action by banks, freedom of choice for loan holders and a sharing of the financial burden between creditors and debtors - for a lasting solution to the problem of Swiss franc-denominated lending, which rules out the possibility of further regulatory activities by the NBS regarding these loans.

Under the NBS decision, which is binding, citizens are to be offered annexes to agreements within 30 days, NBS Governor Jorgovanka Tabakovic said.

In an article published by the Nedeljnik weekly, Tabakovic said that, this time, the NBS requires the banks to report in detail on individual offers made to loan holders, and that failure to comply with the decision will be penalised.

Banks that do not comply with the decision - with failure to do so to be ascertained through control procedures or legitimate complaints by citizens - will face penalties that are also stipulated by the decision, Tabakovic said.