Yesterday, the Supreme Court announced a decision regarding loans in Swiss francs which 8 Croatian banks placed to its clients that was resolved by allowing them conversion rights in Consumer Credit Act from September 2015. View on implications of this decision are mixed, while stock market has negatively reacted to the news.

The Supreme Court has rejected the banks’ revision of a class action lawsuit which was led by associations ‘Potrošač’ and ‘Franak’ who have represented the people who took loans in Swiss francs. The Judiciary Council ruled that the banks (eight of them) “violated the collective interests and rights of the borrowers contracted in Swiss francs. In doing so, the Supreme Court further opened the door to (former) debtors on loans in “Swiss” to seek compensation from the banks, but only through subsequent individual litigation. In terms of further legal options, however, banks still have to address the Constitutional Court, which they mostly announce, and procedures at the European level. The association Franak has said that 125,000 consumers who have contracted CHF loans can claim their money without hesitation in the courts, and that they have time to do it until 2023. In the Croatian Banking Association, on the other hand, they say that the Supreme Court has not given any new rights to the borrowers, and that it has not taken stance regarding any individual litigation.

Of the banks involved in Swiss Franc case two the them are listed on ZSE – Zagrebačka banka and PBZ. Yesterday, their share prices have decreased by 0.83% and 0.63%. Zagrebačka bank’s turnover was quite substantial concerning its usual daily turnover and it has amounted to HRK 1m, while PBZ turnover has reached HRK 0.65m. It remains to be seen in the next period if banks will increase reservations for the potential lawsuits and if they will become more transparent on the potential outcome of this issue. It looks like that investors are not so fond of this lack of transparency when they are regarding this news as negative.