PARIS, Jan 2 (Reuters) – BNP Paribas has
agreed to compensate customers after a court found it guilty of
misleading practices over Swiss-franc denominated mortgages, in
a deal that could cost the French bank as much as 600 million
euros ($658 million), a source close to the matter said.
The settlement follows eight years of litigation led by
French consumer group CLCV and targeting BNP’s consumer unit BNP
Paribas Personal Finance, which offered the loans amid the
2008-2009 financial crisis.
“We confirm that, at Personal Finance’s suggestion, an
agreement has been reached with the CLCV association to offer an
amicable solution to customers who so wish,” BNP Paribas
Personal Finance said in an emailed statement, without
elaborating on the costs of the settlement for the bank.
CLCV said in a separate statement that about 4,400 customers
could receive compensation. The Paris appeals court in November
found BNP Paribas’ consumer unit responsible for damages
suffered by the customers.
The loans in question, designed for tax-free rental
investment, were made in Swiss francs but repayable in euros.
The terms of the loans enabled borrowers to benefit from lower
interest rates but exposed them to foreign exchange risk.
Their repayments soared when the euro fell against the Swiss
currency in the wake of the 2008 financial crisis.
The agreement between CLCV and BNP Paribas allows for the
cancellation of loan contracts, which generally ranged from
120,000 to 150,000 euros, the source close to the matter said.
That could in theory cost BNP Paribas between 400 and 600
million euros, the source added, confirming a report by
newspaper Le Parisien.
Most of that sum is made up of money that was still due
under the terms of the loan contracts.
($1 = 0.9115 euros)
(Reporting by Mathieu Rosemain
Editing by Tommy Wilkes and Mark Potter)
Source: marketscreener.com