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Bank data show that Croatian citizens that took loans in Swiss Francs in the last couple of years are not converting them to euros or kunas, in spite of the significant increase of the exchange rate compared to the kuna.

Since they were first offered in 2004, these loans became more attractive to citizens because of the lower interest rate, which reached levels of 1.5% lower than Euro-based loans. Since the Croatian National Bank (HNB) is mainly focusing on “defending’’ the exchange rate of euro/kuna, without their intervention, the exchange rate of the Swiss franc is growing. The Central Bank has been warning citizens since 2005 of the risk associated with taking these loans, since the Swiss franc is an instable currency. According to HNB statistics, since February 2007, the exchange rate of the franc/kuna has grown by 9.75%. Nonetheless, recent announcements by the Swiss National Bank to intervene to restore the value of the Swiss franc might just bring back a smile to face of the indebted citizens. Banks quickly reacted to the unfavorable conditions of these loans. Privredna Banka Zagreb (PBZ) cancelled car and property loans in Swiss Francs in February 2008, offering their clients to switch to kuna loans for free. Still, only a small portion of them did that. In PBZ, approximately 20% of their citizen’s loans are in Swiss francs and they comprise approximately 10% of their total portfolio. Raiffeisen Bank cancelled Swiss Franc loans in November 2008. At the end last year, Erste Bank had 28% of their total loans tied to the Swiss Francs. Although they are not charging for the conversion of loans to different currency, Erste Bank says that very few clients have decided to do so. By the end of 2008, when they also stopped offering these type of loans, Zagrebačka Banka had 13.2% of their loan portfolio tied to the Swiss Franc.