LAWS TO WATCH: Consumer Credit Act

As of 1 January 2013, the proposed amendments to the Consumer Credit Act set an interest of 3.23% on loans pegged to the Swiss franc, if the franc appreciated 20% from the day when the loan was taken.  As a result, the loan instalments would be reduced by approximately 25%.

The government received a calculation from the Croatian National Bank (HNB) under which the average weighted interest rate on housing loans pegged to the Swiss franc over a 13-year period amounted to 4.62%.  A 30% discount will be applied to that rate, making the interest rate on all loans pegged to the Swiss franc 3.23%.

These amendments are the result of a compromise reached between the Ministry of Finance and commercial banks. At first, the ministry demanded from commercial banks to use the initially contracted interest rate when calculating monthly loan instalments.  However, the HNB warned the government that, if the mentioned provision is included in the final draft, the banks would generate approximately €66 million less revenue, causing chaos and legal uncertainty in the banking sector. The Croatian Banking Association (HUB) threatened to file a complaint before the Constitutional Court, due to the retroactive application of the legislation.

The government received a written note from the HUB that it was scrapping any interpretations of constitutionality and retroactivity concerning the lower interest rate. The Sabor enacted the legislation under the 2nd reading…

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