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Foreign currency loans
In 2008, Nordea Bank issued loans denominated in Swiss francs to Lithuanian consumers. Loans worth €68.115 million were issued before the bank stopped the practice in June 2008. The bank’s advertising referred to taking out a mortgage in Swiss loans as a safe choice: “The Swiss currency is traditionally considered one of the best choices for consumers”. The risk of currency fluctuations was not clearly explained to borrowers, and ultimately their mortgage debt soared (up to 50% increase in monthly instalments) after the Swiss franc rose sharply against the euro during the financial crisis in 2010-11 and again in 2015.
By the beginning of 2015, there were 302 consumers with Swiss currency loans. In July 2017, the government passed a law forbidding the issuance of foreign currency loans for consumers, but no actions were taken to help borrowers with outstanding Swiss currency loans. The Central Bank of Lithuania stated that the borrowers were financially literate enough to understand risks, therefore, no compensation for losses followed. Approximately 30 borrowers are defending their case in the courts. The case is still pending.