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Swiss franc borrowers in Romania get good deal

October 18, 2016

Romanian lawmakers have unanimously backed a bill to convert Swiss franc loans into local currency at historical rates. The nation's central bank was not amused by the vote, saying it would cost the country dearly.

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Swiss francs
Image: picture-alliance/dpa

Romania's lower house of parliament on Tuesday approved a bill to help holders of mortgages taken out in Swiss francs by converting the loans into local currency at the rate at which they were borrowed.

In the mid-2000s, thousands of Romanians took out low interest rate loans denominated in Swiss francs. But when the Swiss currency increased in value, people found it increasingly hard to repay those loans.

Lawmakers approved the conversion bill in a 248-0 vote as political forces positioned for a parliamentary election on December 11.

Bankers up in arms

Romania's central bank had opposed the bill all along, saying it would cost local lenders about 2.4 billion lei ($600 million, 545 million euros).

Expensive francs

It said that out of a total of about 75,000 loans, there had been about 57,000 conversion and restructuring requests already filed by borrowers across the EU member country.

"This is not a law against the banking system, but a reparatory piece of legislation for borrowers," Social Democrat chief Liviu Dragnea told deputies. The bill still requires the signature of President Klaus Iohannis.

hg/jd (Reuters, AP)