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European Banks Have Another FX-Loan Ruling to Worry About

Feb. 18, 2020, 8:40 AM

Croatian banks, mostly units of Italian and Austrian parents, have started to feel the heat ahead of a landmark Supreme Court ruling connected to Swiss-franc loans.

The tribunal is due to rule by April whether borrowers who voluntarily converted their mortgages into the euro may seek to have those contracts nullified and win compensation. Should it rule against the banks, their costs related to all Swiss franc loans may reach 20 billion kuna ($2.9 billion), according to estimates from the banking industry and borrowers’ representatives.

The lenders have already taken notice. They doubled their provisions last year, according to the...

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