Austria's Raiffeisen Bank is preparing to file a complaint at the Croatian constitutional court later in July against a recent law that aims to declare thousands of its loans to Croatians void, a bank spokesman told Reuters on July 19.

Earlier in July, the Croatian parliament adopted the law in question to protect local debtors against euro-denominated loans provided by several regional Raiffeisen branches in the southern Austrian province of Styria. The Croatian parliament has decided that Raiffeisen’s branches in Austria were neither licensed to operate in Croatia nor did they fulfil requirements to adequately screen the borrowers' ability to repay the loans.

Raiffeisen calls the allegations unfounded and plans to fight the law in court. About 3,000 loans in question worth about €200mn were granted to Croatian borrowers 10 to 15 years ago

"We believe the law is unconstitutional," the Raiffeisen spokesman told Reuters. Nearly half of the borrowers are having difficulties paying the money back, the spokesman also said.

"Every single Croatian borrower came to Austria and signed the contract on-site," according to the Raiffeisen bank spokesman.

Austria's central bank head Ewald Nowotny recently travelled to Croatia to mediate between Croatia and Raiffeisen and he called on the parties to end the dispute.

Croatia is under pressure on several fronts regarding its banking laws. However, Croatian courts, including the constitutional court, have ruled in favour of the Croatian parliament in the previous complaints by the international lenders.

The Croatian constitutional court rejected on April 7 a request from local banks to assess the constitutionality of the Swiss franc loan conversion programme, and confirmed that the programme was in accordance with the Adriatic country’s constitution. The Croatian Banking Association (HUB) criticised the constitutional court’s ruling.

The European Commission (EC) probe into the loan conversion programme is still ongoing. UniCredit has also filed a lawsuit at the International Center for the Settlement of Investment Disputes in Washington, though this has been criticised by the EC, arguing that the use of bilateral investment protection treaties (BITs) fragments the single market.