Austrian Franc Borrowers Seek Compensation From SNB on Cap Exitby
A local court in Vienna awarded an Austrian borrower compensation for a 13,000 euro (14,200) loss in a default judgment, according to the plaintiff’s lawyer, Clemens Pichler. The loss was realized when the client converted the loan into euros after the SNB abandoned the minimum exchange rate of 1.20 francs per euro on Jan. 15, 2015, he said. The SNB appealed and the case is now pending in a regional court in Vienna.
The SNB’s decision to scrap the cap shocked foreign exchange and equity markets around the world. It came just three days after Jean-Pierre Danthine, then vice president of the SNB, said the currency ceiling “must remain the pillar of our monetary policy.”
“The client didn’t convert his loan before because of consistent policy comments of the SNB,” Pichler said by telephone from his law firm in Dornbirn, in the western Austrian province of Vorarlberg. The SNB “consciously spread false information to prevent conversions from francs into euros,” he said.
Contacted by Bloomberg, the SNB said in an e-mailed statement that it wouldn’t comment on any ongoing proceedings. Commenting generally, spokesman Walter Meier said the cap exit “was a classic monetary policy decision” taken in line with central bank’s mandate.
Loans denominated in Swiss franc and Japanese yen became popular with Austrian households in the mid-1990s because they offered lower interest rates. By 2006, the share of foreign-currency loans rose to 31 percent of all household lending, according to the central bank. While the practice was banned in 2008, loan of this kind still amount to about 24 billion euros, or 17 percent of all household loans, according to financial watchdog FMA.
Pichler is also representing clients in similar cases pending at courts in the provinces of Tyrol and Vorarlberg, he said.
The story was first reported by Austrian broadcaster ORF.