Zagreb Court Rules Against Banks in Swiss-Franc Loan Case

A commercial court in Zagreb, the capital of Croatia, ruled against local units of eight international banks for misleading borrowers with loans in Swiss francs.

Judge Radovan Dobronic said the banks, including Zagrebacka Banka d.d., a unit of UniCredit SpA (UCG), and Privredna Banka d.d., a unit of Intesa Sanpaolo SpA (ISP), were not sufficiently clear in explaining to clients the risks of having loans with variable interest rates.

The banks “didn’t inform clients about all the parameters related to their decision,” Dobronic said. The banks “hurt the collective interests of borrowers of Swiss franc loans” and “created an imbalance in the rights of contractual parties” in violation of consumer-protection laws.

The guilty verdict may affect the banking practices in the new member of the European Union and may cost the banks a combined 18 billion kuna ($3.1 billion), according to a calculation made by Zagreb-based Banka Magazine. Both sides can appeal the ruling.

There are an estimated 75,000 loans in Swiss francs in Croatia, totaling 28 billion kuna, according to Banka Magazine. Croatians are paid wages in the local currency, kuna, which is managed against the euro.

A number of borrowers, represented by consumers’ association Potrosac, in December filed a lawsuit against the banks over contracts allowing banks to charge a variable interest rate on monthly loan payments.

The borrowers in May also filed a lawsuit against the central bank, alleging it was illegally favoring commercial banks in allowing the practice.

To contact the reporter on this story: Jasmina Kuzmanovic in Zagreb at

To contact the editor responsible for this story: James M. Gomez at

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