Volksbank Romania, one of the top 10 local banks, will freeze the Swiss Franc (CHF) exchange rate for its customers at a 17% lower level than the official rate announced by Romania’s central bank on Monday, January 19. This measure is aimed at helping Volksbank clients cope with the recent surge in the Swiss Franc rate.

Volksbank clients will be able to pay their monthly installments for loans in Swiss Francs at a fixed rate of RON 3.8035/CHF, which is the official exchange rate registered on December 31, 2014. This measure will only be applied in the next three months (until April 17), Volksbank announced.

The Swiss Franc has gained 18% against the Romanian Leu (RON) since Wednesday, January 14, after the Swiss Central Bank announced on Thursday that it will no longer keep the Franc’s peg to the Euro. After this decision, the CHF skyrocketed against the EUR and all other currencies, causing serious turbulences in the international financial system.

Most currencies in Eastern Europe strongly depreciated against the Franc, impacting people who have loans in Swiss currency and on the banks that have granted such loans.

In Romania, the number of people who have loans in Swiss Francs and who have been affected by the recent moves in the exchange rates starts at 75,000, by some accounts, and could go up to as many as 200,000, by other estimates. Total loans in CHF, in Romania, amount to about EUR 2.1 billion, which is 4.5% of the total loans granted by Romanian banks.

Some of the clients that have loans in Swiss Francs initiated a boycott saying that they will no longer pay their installments. The Prime Minister asked the Finance Minister to talk to central bank officials in order to find solutions for those that have loans in CHF.

The debate also reached the Parliament, where the liberals have asked for the personal insolvency law to be expedited. Another draft law aimed at converting CHF-denominated loans into local currency loans at a fixed rate has been discussed in recent months, but the project wasn’t favored by local banks.

However, some local banks have also announced measures to support clients with loans in CHF, such as this offer from Volksbank.

“With this measure we offer support to our clients until conditions on the foreign exchange market stabilize, completely compensating the recent surge of the Swiss Franc. This will also give us the necessary time to come up with a long-term solution for our clients with loans in Swiss Francs,” said Benoit Catel, Volksbank president.

This means that for a EUR 500 monthly instalment, Volksbank clients will pay RON 1,901 instead of RON 2,236, which stands for a RON 334 (EUR 74) discount.

Catel added that this initiative was also communicated to local lender Banca Transilvania, which recently announced it will take over Volksbank Romania.

Austrian group Volksbank’s local subsidiary has one of the biggest CHF loan portfolios among local banks. The lender last year announced it will come up with an offer to convert CHF-denominated loans into local currency loans, after facing legal problems with some of its clients, who went to court accusing the bank that it granted them CHF loans without informing them of the risks.

OTP Bank also announced on Friday that it will reduce the interest rate for CHF loans by 1.5% for the next three months.

The CHF/RON exchange rate more than doubled compared to early-2008.

editor@romania-insider.com