The association Franak, established by Croatians who took loans pegged to the Swiss franc in light of a steady appreciation of the Swiss currency, has condemned Croatian Banking Association (HUB) president Zoran Bohacek's statement that there was no debt crisis in Croatia, saying that such statement was unbelievable and that it represented an attempt to prevent a debate on the responsibility of banks in generating a debt crisis by ignoring the problem.
The fact that there is a lawsuit against eight banks confirms there is a debt crisis in Croatia and how, and that this crisis is not only affecting those who took loans but the whole loan-taking system in Croatia, Franak said.
It is indisputable that there is a debt crisis in Croatia and an increasing number of distress warrants and non-performing loans prove that, Franak said adding that the latest GfK survey shows that 50 per cent of those polled in Croatia can barely make the ends meet.
The Franak NGO notes that more than 100,000 clients have loans pegged to the Swiss franc, of which 75,000 are housing loans, and in some cases repayment rates have increased from 35% to 100%. Mortgages denominated in the Swiss franc became wildly popular a few years ago, because that way borrowers could get low interest rates initially. But then the national currency, the Croatian kuna, plunged in value, and homeowners faced rapidly rising monthly payments, finding themselves owing more to the banks than they had borrowed.
