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Foreign currency loans

From 2006 to 2008 many Greek banks, including Alpha bank, Eurobank, Bank of Piraeus, and the National Bank of Greece granted loans in Swiss francs to consumers. 70,000 consumers in Greece took out such loans.

Foreign currency loans were sold to consumers at lower interest rates than loans in the local currency. The banks also advertised that mortgages in Swiss francs were more stable and that there was little risk for consumers. The risk of currency fluctuations was not clearly explained to borrowers, and ultimately their mortgage debt soared because the Swiss franc rose sharply against the euro in 2010-11 and 2015. The banks appeared to have failed in their responsible lending obligations.

Greek courts recognised that the terms of the mortgage contract, which meant the customer could suffer if there was any currency fluctuation between the euro and the Swiss franc, were void. The rulings were based on the provisions of the EU’s Unfair Contract Terms Directive stating that “A term of the contract which was not part of the negotiations among the parties is to be rendered void when it creates serious imbalance between the rights and obligations of the parties.”