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Photograph: FreeImages.com/Michael Faes
Having adopted amendments to the Consumer Credit Act, the Croatian government sent a bill to parliament on Thursday proposing a solution to the problem of citizens who had taken loans from the Austrian Raiffeisen credit cooperative, which has announced an action to establish whether the bill is in line with the Croatian constitution and EU law.
 
Justice Minister Orsat Miljenic said that the citizens had been naive and had entered into arrangements that turned out to be very bad for them. "On the other hand, it's a fact that in this country no one reacted when countless intermediaries were encouraging and persuading citizens to take such loans."
 
He said that Croatian courts had taken the position that this matter did not fall within their jurisdiction, "which is totally against the provisions on consumer protection, because consumers can choose a court based on their place of residence."
 
"Here we explicitly say that Croatian courts have the jurisdiction, and they won't be able to say that they don't, in which way we give people an opportunity to protect their legal interests. The bill also says that agreements signed with persons who were not authorised to do so in Croatia are null and void, provided they were signed in Croatia, because we cannot allow anyone to conclude such agreements in this country without the authorisation of the Croatian National Bank," the minister said. He added that in cases where agreements are declared null and void, recipients of loans would have to pay them back "but at least these people are being given a chance to prove them null and void."
 
A third measure proposed that courts should suspend foreclosure pending completion of proceedings to prove such loan agreements null and void. Miljenic said that such loans were taken by people who were not creditworthy, "because the only thing that was important was that they had property at a good location."
 
Raiffeisen Banking Group Styria said in a statement on Thursday it considered the Croatian government's amendments to the Consumer Credit Act an act of interference in the contractual will of the parties and that it would initiate a procedure to assess their conformity with the Croatian constitution and the acquis communautaire.
 
Banks belonging to this group have granted a total of 3,000 loans to Croatian citizens in Austria, putting their value at 265 million euros or 2 billion kuna. These loans were much more favourable than those offered on the Croatian banking market at the time, the group said. When taking these loans, citizens used their real estate as security in accordance with Croatia's existing laws, which is why these loans cannot be called usurious, it added.
 
Problems arose with the emergence of the economic crisis when some loan holders could no longer repay their instalments regularly, and as interest continued to run, some of the properties were foreclosed. Evictions have been conducted in 70 cases to date, accounting for two per cent of the total number of loan beneficiaries, the group said.

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