The recent increase in the value of the Swiss franc has seriously threatened borrowers of loans in Swiss currency, particularly many in Eastern Europe, as their installments continuously rise alongside the increase in the value of the franc.
A large number of residents in Eastern Europe rushed in 2004 to take out loans in švicarskim francima, which were attractive due to lower interest rates than those in their home countries. "However, due to the lower interest rates, they exposed themselves to exchange rate risk," said Marcus Hettinger, a currency expert at Credit Suisse. The convenience of loans in francs coincided with a period when the švicarska valuta was undervalued and when Eastern European countries financed consumption through loans, stimulating appetite for this type of borrowing.
In the first quarter of 2010, the share of loans in francs relative to the total number of loans in the non-banking sector rose to 34.3 percent in Hungary, 20 percent in Poland, 13.6 percent in Austria, and 13 percent in Croatia, according to data collected by švicarska banka UBS. In terms of the amount of money, Poles borrowed the most, 53 billion švicarskih franka, followed by Hungarians (36 billion), and then Croats (7 billion), adds the zueriška banka.
After several years of economic growth, the financial crisis began to threaten this system in 2007. A sharp decline in the value of domestic currencies and the strengthening of the franc made the situation difficult for many debtors. Due to the breadth of the phenomenon, the respective countries reacted. Thus, the Austrian Financial Market Authority (FMA) recommended in 2008 that such types of loans should no longer be commercialized, and in March 2010, it defined strict standards for their approval. Several Croatian banks, on the other hand, reduced interest rates on these loans and offered their conversion to euros.
