Slovenian Railways (SŽ) recorded a loss of 40 million euros over five years due to currency risk, having tied their euro loan to the exchange rate of the Swiss franc through an agreement with two banks, writes the Ljubljana daily Dnevnik in its business supplement on Monday.
At the urging of a financial consultant for whom they paid 140,000 euros for his services, SŽ agreed with two banks that their 80 million euros debt would be calculated in Swiss francs due to lower interest rates, and the concluded contract on derivative financial instruments was supposed to protect them from currency risks.
Since the banks took on the obligation to cover the currency risk of the franc against the euro only if the exchange rate difference changed by up to seven percent, everything has now turned out to be a ‘financial adventure’ as the Swiss franc rose against the euro more than anticipated during the financial crisis, the paper states.
With the mechanism agreed upon with the banks, known as derivative financial instruments, Slovenian Railways thus lost 40 million euros due to currency risk over five years, which includes the cost of terminating the financial contract with Nova Ljubljanska Bank (NLB) and Unicredit Slovenia amounting to 16 million euros, Dnevnik reports, adding that the loss data has also been confirmed by Slovenian Railways and that similar arrangements have been made by other Slovenian companies with banks.
