Finance Minister Zdravko Maric has announced the resumption of negotiations with executives of commercial banks operating in Croatia with regard to the conversion of the Swiss franc-pegged loans into the euro-denominated lending, while his predecessor Boris Lalovac finds this as a sign that Zagreb is caving in under the banks' pressure.
"We have not yet been officially notified that any formal legal actions have been initiated before international courts. however, the talks with representatives of domestic lenders will resume. It is difficult to comment now on the direction (of the talks), please let us formulate our strategy to see what all the possibilities and restrictions in this case are," Maric told the press ahead of an international conference on efficient public sector management in Zagreb on Tuesday.
Media have speculated that major commercial banks in the country are considering filing a complaint against Croatia before the International Centre for Settlement of Investment Disputes (ICSID) in Washington, over what they see as a reduction of their profits and breaches of some laws stemming from the said conversion.
Amendments to the Credit Institutions Act and the Consumer Credit Act, which regulate the conversion of loans pegged to the Swiss franc into euros, entered into force on 30 September 2015 during the term of the government led by SDP chief Zoran Milanovic. The conversion was carried in such a way that the initially approved loan principal denominated in Swiss francs was converted into euros according to the exchange rate applicable on the day of loan disbursement and the originally agreed interest rate in Swiss francs was to be replaced by one applicable to euro loans.
Today, Maric declined to comment on media claims that Deputy Prime Minister and HDZ leader Tomislav Karamarko has already raised "a white flag" towards the commercial banks in his latest comments that Croatia would have to pay billions to banks in damages.
Former Finance Minister Boris Lalovac on Tuesday recalled that for a year he had tried to hold talks with bankers before the adoption of the legislation on the conversion in a bid to seek a solution together with them, but in vain.
"When we arrived at the solution, they were panic-stricken and now they want swift solutions. Unfortunately this (incumbent) government is caving in (under banks' pressure), and that is not good, as all the arguments are in favour of the government and Croatian citizens," said Lalovac, who currently serves as an SDP lawmaker.
He explained that "a peculiar situation" had occurred in Croatia with Croatian citizens having borne the risk of interest, exchange rate, and facing a decline in the value of their mortgaged properties, 60% higher instalments and an increase in the capital sum of the loan 10 years after servicing it.
He insisted that if all EU directives had been implemented in Croatia that situation would not have occurred.
The Croatian National Bank (HNB) should not have allowed that to happen, Lalovac said at the conference, explaining the course of events that forced the previous government to respond and help over 50,000 loan-takers.