Wednesday, January 3, 2024

Due to Swiss franc loans, French bank BNP Paribas could lose €600 million.

After coming to an agreement to reimburse consumers who were found to have been duped about mortgages issued in Swiss francs, the French bank BNP Paribas may have to pay out €600 million (RM3 billion).

Yesterday, BNP Paribas and the CLCV consumer association both acknowledged that an agreement had been struck to reimburse the roughly 4,400 individuals who had taken out the low-interest mortgages.

The mortgages were granted in 2008 and 2009 with Swiss francs as the unit of account. The repayment was made in euros at the going rate of exchange.

Being a popular safe haven asset, the Swiss franc saw a sharp increase in value relative to other currencies during the global financial crisis as investors fled the chaos of the markets.

Customers of BNP Paribas who had the mortgages thus had to pay much more to have their mortgages repaid.

Due to Swiss franc loans, French bank BNP Paribas could lose €600 million.

After an appeals court determined in late November that the BNP Paribas company that issued the mortgages had failed to adequately notify investors of the currency risks involved, an agreement was reached between BNP Paribas and the CLCV.

In a separate legal action, CLCV sought the nullification of the abusive elements in the mortgage contracts.

In a statement, the consumer association stated that BNP Paribas would provide a settlement to each and every one of the impacted debtors.

A source claims that the majority of creditors would receive between €120,000 and €150,000, meaning that BNP Paribas would have to pay between €400 and €600 million in total.

Regarding the financial details of the agreement, BNP Paribas wished to remain silent.

CLCV expressed its approval of the agreement, stating that it served the interests of the customers and did not need them to wait for the resolution of all legal issues in order to obtain financial compensation.

Due to lower interest rates in Switzerland, lenders in a number of nations issued mortgages in Swiss francs in the lead-up to the global financial crisis.

Last year, Polish borrowers successfully contested local banks that had provided home loans denominated in Swiss francs, winning a significant decision from the EU's top court.

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Due to Swiss franc loans, French bank BNP Paribas could lose €600 million.