Every 7th borrower has already converted
New offer: 2.9% fixed interest guaranteed for 10 years
Erste Bank continues to recommend a switch
Since the autumn of 2011, Erste Bank has been recommending
customers with Swiss franc loans to convert their loans. In
a campaign, borrowers were strongly advised to switch from
fluctuating Swiss franc loans to fixed-interest or capped
euro loans. The reason was - and still is - to avoid the
double risk of interest rate and currency fluctuations.
As a result of one-on-one talks, over 2,500 customers
already opted to exit foreign currency financing. This
corresponds to a credit volume of around EUR 400 million.
Additionally, some 1,500 foreign currency borrowers
converted loans repayable upon maturity to amortisation
loans (EUR 270 million) to lower performance risk of the
loan repayment vehicles. All in all, around one-fourth of
all customers have already responded.
Based on the new interest rate situation, Erste Bank is now
offering a new variant for the conversion. The offer is for
a ten-year, guaranteed, fixed-interest rate for an
installment loan in euro with a rate of 2.9%. The
conversion of the loan is free of charge and no fees will
Apart from the new interest rate situation, it is primarily
the minimum exchange rate of the Swiss franc that may soon
change and thus disadvantage borrowers with foreign
currency loans. Because a severe deterioration of the debt
crisis in the euro zone might enormously increase demand
for Swiss francs as a safe haven. This would make it hard
for the Swiss National Bank (SNB) to defend the minimum
exchange rate of 1.20. This was also confirmed by SNB
president Thomas Jordan at a news conference in Bern on 14
June 2012: "Further shockwaves on the financial markets"
said Jordan might affect the "enforcement of the minimum
In all probability, this would put the euro/franc rate far
below 1.20 "Therefore, we believe it is our duty to
point out the risks and make a good offer for a
conversion," declared Peter Bosek, Erste Bank Management
Board Member. "Furthermore, I also recommend all customers
to regularly check their repayment vehicles and consider a
conversion from a bullet loan to an amortisation loan."
Facts & Figures on Swiss franc loans
In Austria, almost every fourth private loan is a foreign
currency loan. In total, a volume of slightly more than EUR
34 billion is outstanding in Swiss franc loans of private
individuals. At Erste Bank, around 14,000 private
individuals still have foreign currency loans with an
outstanding volume of around EUR 2 billion. The average
amount borrowed per person was around EUR 150,000.