Addiko Bank to seek international arbitration over Montenegro’s CHF loan conversion bill

By bne IntelliNews September 15, 2016
The Montenegrin arm of Addiko Bank (formerly Hypo Alpe-Adria Bank) said on September 14 it will resort to international arbitration over amendments to the law on the conversion of Swiss franc loans.
Earlier in September, the parliament adopted the changes, according to which Addiko Bank, the only bank that has provided Swiss franc loans in Montenegro, will have to convert such loans retroactively even if they have already been repaid by borrowers. In these cases, the bank will have to return money to borrowers. Also, the bank is not allowed to calculate a default interest on the converted loans.
“Addiko Bank AG will seek international arbitration on the law for conversions of Swiss franc loans, including all its amendments,” the bank’s spokeswoman Mina Vojinovic told bne IntelliNews by email.
According to news outlet CDM, it will cost Addiko Bank around €10mn to convert all the CHF loans that have already been repaid.
Zoran Jelic, MP from the ruling Democratic Party of Socialists (DPS), which proposed the amendments, said that the reaction from the bank had been expected.
“This reaction is expected by Addiko Bank, as with the amendments we are taking significant financial funds from them, which they, in my opinion, took from citizens unreasonably,” CDM quoted Jelic as saying.
On September 13, Addiko Bank sent a letter to Montenegro’s President Filip Vujanovic, claiming that the law amendments are seriously violating their property rights, as well as the international treaty between Montenegro and Austria.
However, Jelic claimed that the amendments are in compliance with Montenegrin banking legislation.
According to Nebojsa Medojevic, MP of the opposition Democratic Front (DF), Addiko Bank’s threat to seek international arbitration is a lobbying attempt.
"This is an attempt at "fishing in muddy waters” … I appeal to the prosecutor to monitor the actions of the central bank and judges of the constitutional court in this case, who will have to worry about their own responsibility, if they judge in favour of Addiko Bank," CDM quoted Medojevic as saying. 
In July last year, the parliament adopted a bill according to which all individuals were allowed to convert their Swiss franc loans to euro at an annual interest rate of 8.2%, as thousands of Montenegrins were negatively affected by the decision of the Swiss central bank to abandon its ceiling of SFr1.20 against the euro in January 2015.
As of end-January last year, the CHF loans stood at €31.5mn. More recent figures were unavailable.
Croatia's parliament also approved legislation on the conversion of loans denominated in Swiss francs into euros in September 2015, with the costs being borne by the banks. The move is likely to cost financial institutions around HRK8bn, the central bank has estimated. About 80% of Croatian deposits and loans are euro-denominated.
Read in IntelliNews Pro
Get IntelliNews Pro

Related Articles

Bulgaria's BACB to acquire 99.94% of Tokuda Bank

The Bulgarian-American Credit Bank said on April 16 it has agreed to acquire 99.94% of local Tokuda Bank from Japan-based Tokushukai Incorporated. The two banks are among the smallest in Bulgaria ... more

EIF signs guarantee agreements with 11 banks in Western Balkans, unlocking €750mn for small businesses

The European Investment Fund (EIF), part of the EIB Group, said on April 15 that it has signed guarantee agreements with 11 banks and financial intermediaries in the Western Balkans. These ... more

UniCredit sees modest growth and fiscal overshoot for Hungary in 2024

Hungary’s economic rebound will be modest this year, around 2%, and the return to potential growth is set to be postponed to 2025 with GDP expanding around 3.2%, according to UniCredit bank's ... more

Follow Us On

Most Read

  1. Iran vs Israel: Who is better equipped for war?
    6 days ago
  2. Saudi Arabia to scale back plans for Neom city
    9 days ago
  3. BREAKING: Iraq, Syria and Jordan close airspace amid Iranian strike on Israel
    6 days ago
  4. Oil continues to flow to Israel via Turkey despite Erdogan’s vehement speeches on plight of Gaza
    5 months ago
  5. Russia’s war economy boosted by rising oil prices
    3 days ago
  1. Russia could pay off its entire external debt tomorrow, in cash
    20 days ago
  2. Speculation swirls of “Men in Blue” in Crocus City Hall terrorist attack linked to FSB
    24 days ago
  3. Albanians campaign on social media to keep bus bridge created in freak accident
    1 year ago
  4. UBN: Russia could take the Baltic states in 48 hours
    29 days ago
  5. BRICS announce a blockchain-based payment system to create a common currency
    23 days ago

Reports

Dismiss