First agreement on loan in Swiss francs terminated – Court deems foreign exchange difference “significant change of circumstance”

The first agreement between a foreign bank and a citizen of Serbia on a housing loan in Swiss francs has been terminated at the Higher Court of Novi Sad. The court reached this decision due to a “significant change of circumstances” from the moment the loan was taken out 2008 until the current moment. Both parties need to repay the amount, with default interest, in dinars, gained from the moment of the signing of the agreement.

For the debtor, this means two to three million dinars, instead of 13 million, to be rapaid to the bank by the end of the repayment period. To clarify, the value of the housing loan taken out in 2008 was RSD 7 million. In eight years, the debtor repaid one RSD 6.5 million, and the remaining debt is RSD 13 million, Instead of this great amount, accrued due to foreign exchange differences, the debtor needs to repay far less to the bank, whereas the bank will return everything paid by the debtor in the past eight years.

– It's apparent what kind of a discrepancy has occurred here – says Dejan Gavrilovic of the Efektiva association.

– If the citizen had known that the Swiss franc would grow from RSD 50 in 2008 to RSD 112, he surely wouldn't have signed such an agreement. The shift in the current exchange rate is the said significant change of circumstance. This, by the way, is the first valid termination, which gives hope that people indebted in Swiss francs will see the justice being done.

Due to a drastic jump of the Swiss franc in 2008, at the beginning of the great economic crisis, banks raised interest rates on retail loans, doubling the installments. The second blow happened about a year and a half ago, when the franc jumped again, by a third, and reached RSD 120. It's now at RSD 112. The high exchange rate is a burden on the debtors.

Failed proposals

A little over 18,000 people in Serbia have debts on housing loans in Swiss francs. The National Bank of Serbia has offered models for resolving the issue, but very few debtors have accepted the new conditions. Most of them want the problem of the exchange rate to be solved. For this reason, people are filing collective lawsuits as well.

Viši sud u Novom Sadu

Udruženje bankarskih klijenata Efektiva

Narodna banka Srbije Beograd

Swiss franc

housing loans

loans in Swiss francs

Higher Court of Novi Sad

Dejan Gavrilovic

Efektiva

interest rates

NBS