The judgment of the Court of Justice of the European Union was supposed to shake the banking market, but did it shake? Will the termination of the Swiss franc loan agreement be easy now? Bank prices that have been falling for several days have increased just after the announcement of the judgment of the CJEU. So maybe the victory of “frankers” is not so obvious.
As usual, these types of events cause significant interest. Information is provided quickly, but nobody penetrates the credibility or validity of many of the formulations. On this basis, many myths arise that circulate among customers. Very often introducing a lot of confusion and being the foundation of wrong decisions.
What is the judgment of the CJEU?
First of all, the judgment applies not only to “francs” but all “currency users”. And although the number of loans indexed or denominated in CHF is the highest (460,000), the case also applies to people who took out loans in EUR (91,000) or USD (less than 7,000).
The most common myth for customers is the wording regarding the automatic conversion of their loans into USD. In this case, nothing will happen automatically. if we want to make changes to our loan agreement, we must apply it to the bank for it.
After a possible refusal, we must start a lawsuit. The judgment of the CJEU will certainly be helpful, but the trial can take years, and we bear the costs until the judgment is given.
What’s more, if our claim is only partially recognized? And the fee for action in property matters is up to 5% calculated on the amount for which we will sue the bank. The court will divide the costs proportionally into the applicant and the bank.
Termination of the loan agreement
The judgment of the CJEU gives the opportunity to apply for the termination of the loan agreement. It is only difficult to predict what the consequences may be. It seems logical to consider the agreement to be terminated, but with the assumption that a foreign currency loan should be granted in USD.
Credit advisors from Good Finance emphasize that the best solution for clients will be the recognition of all loan repayments as capital repayments.
As if the loan was immediately granted in USD
However, it is an ideal solution for clients and bringing the biggest losses to banks. It may turn out that the customer has already repaid the capital and even returned more to the bank and, of course, expects to recover these funds.
However, the bank may complain that it will convert the loan into USD, but at the same time as the interest rate applicable to USD at that time. For example, in 2007 the margins in USD were about 1.2%, but the Credit Checker was over 5%. This may mean that we gain little or even that we have given less to the bank with a loan in dollars.
What if the court declares the contract invalid and we still have a large part of our capital to pay back?
We will have to count on the court to agree on a favorable time to return these funds to the bank. By default, the contracts include a 30-day record for repayment of funds. It may turn out that we have won, but we must quickly find funds for the loan settlement.