Croatian parliament approves conversion of chf loans into euros

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ZAGREB, Sept 18 Croatia's parliament adopted legal changes on Friday enforcing the conversion of loans denominated in Swiss francs into euros, a move expected to incur costs of up to 8 billion kuna ($1.20 billion) for local banks. Parliament supported the law despite threats from banks of legal action against Zagreb and warnings from the central bank about major losses for private lenders..

The law will take effect from the end of this month and banks have until mid-November to convert the principals into euros and deliver new repayment plans for loan holders.

Most of the Swiss franc loans were taken out during the credit boom in the 2000s, driven by low interest rates, and were primarily used for mortgages or buying commercial property.