franak - swiss_franck.jpg
Photograph: 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.

Related stories

Gov't discusses SDP interpellation

FinMin happy about ruling, says banks to be punished

Croatian law on consumer bankruptcy enters into force on 1 Jan

Latest news

Plane crashes at airport in Melbourne

A five-passenger charter plane has crashed into a building next to Essendon Airport in Melbourne, with witnesses reporting explosions, fire and black smoke, police said Tuesday.

Air France pilots give green light to lower cost subsidiary

Members of Air France's main pilots union on Monday voted to accept the creation of a new lower cost subsidiary that the flag carrier hopes will help it compete on long-haul routes.

US Army General McMaster tapped as Trump's national security advisor

Army Lieutenant General HR McMaster will be the new White House national security advisor, US President Donald Trump told reporters Monday.

Greece's creditors want sweeping reforms before next bailout payment

Greece must make sweeping reforms to its labour market, pension system and collective bargaining agreements in order to receive its next vital bailout payment, the country's European creditors said Monday.

President wants to recall "politically appointed ambassadors", can't do it without gov't

President Kolinda Grabar-Kitarovic said that many politically appointed Croatian ambassadors were not carrying out state policies but that she could not replace them without the government to appoint career diplomats who would fight for Croatia's interests.

Izetbegovic hopes ICJ will confirm Serbia's responsibility for genocide

The Bosniak member of the tripartite presidency of Bosnia and Herzegovina, Bakir Izetbegovic, on Monday rejected criticism stirred up by the announcement that the International Court of Justice (ICJ) would be requested to review its judgement made after Bosnia sued Serbia for genocide.

British lawmakers locked in heated debate over Trump's state visit

Allowing US President Donald Trump to visit Britain would be akin to "pimping out the Queen," one British lawmaker said Monday during a heated debate in British parliament over two petitions concerning the US leader's future state visit.

Vitaly Churkin, Russia's sharp-tongued ambassador to the UN, dies

Russia's long-time ambassador to the United Nations, Vitaly Churkin, died in New York on Monday, following a career that spanned four decades and saw Russia emerge from the Soviet Union and experience many turbulent events in its relations with the West.

French police raid National Front over European Parliament payments

France's far-right National Front Monday said that investigators had searched its offices in relation to allegations that it misused European Parliament funds.

Unhappy Presidents' Day: Trump still manoeuvring after Sweden comment

Donald Trump used his first Presidents' Day in office to continue trying to talk his way out of comments implying a terrorist attack in Sweden that never happened.

Croatia supports Kosovo's territorial integrity - Grabar-Kitarovic

Croatia's President Kolinda Grabar-Kitarovic on Monday expressed the support to Kosovo's territorial integrity and Euro-Atlantic aspirations during her talks with the visiting Kosovo Foreign Minister Enver Hoxhaj.

Petrov rules out early parliamentary election

Parliament Speaker and Bridge party leader Bozo Petrov on Monday dismissed speculation about a reshuffle of the parliamentary majority, saying an early election was likelier, but that right now he did not see "such a scenario."