BORROWERS IN SWISS FRANCS WANT TO SUE BANKS FOR CRIMINAL REASONS Lawyers: "In the matter of CHF loans, criminal lawsuits are possible as well"

While the members of Parliament have "wound down" in the issue of loans denominated in Swiss francs (it has been postponed for the second time on the 28th of January in the Budget Commission of the Chamber of Deputies, due to a lack of quorum), borrowers in this currency perseveringly continue their protests, demonstrating excellent organization, (for instance, they go to their protests in turns, to avoid exhaustion) and announcing that they are going to diversify their operations against banks.

On February 28th, the members of one of the groups created on social networks were planning criminal lawsuits, on claims of fraud (art. 215 of the Romanian Criminal Code of Law).

More specifically "misleading or keeping a person in a state of misinformation on the occasion of the signing or the execution of a contract, done in such a way, that without such misleading or misinformation, the fraud victim would not have signed or executed the contract under the stipulated terms".

This article may be used in court in relation to the ads that banks used in 2007-2008, to promote loans denominated in Swiss francs, according to several statements.

While economic analyst Florin Cîţu says that in a situation like this, things could reach extremes and that "this is what happens when a personal bankruptcy law doesn't exist", lawyers say that any lawsuit is possible.

Gheorghe Piperea told us that a text even exists in the new Criminal Code, which refers to exploiting a borrowers' state of need, when the former is made to accept terms in a loan agreement, but that the provision in question can not be applied retroactively.

Lawyer Nicoleta Grigorescu also told us that there is also the option that the borrowers have thought of, of bringing criminal lawsuits against banks, but that this procedure would involve longer trials, holding up the civil lawsuits.

She told us: "Those commercials saying that the Franc was a safe currency resemble those that used to say < Sleep tight, FNI is vigilant in your stead! >. Sure you can file a criminal lawsuit against anyone, but it should be known that the criminal lawsuit will put the civil lawsuit on hold. If someone files a criminal lawsuit against a bank, the bank can request for the civil lawsuit to be suspended until the investigation is completed, which could take a long time".

Judge Horaţius Dumbravă, member of the Supreme Council of Magistrates, raised a warning, a few days ago, writing, on the juridice.ro website, that "the Romanian state must think of other measures to prevent the veritable theft that Romanian citizens have been subjected to, as bank debtors". "Either the way Croatia did it - the conversion for a year at the historic exchange rate of the domestic currency against the franc, or perhaps even by starting wide-scale criminal investigations, as has happened in Hungary. It is unquestionable that there are far too many coincidences in the emerging countries of the Eastern-European space: it could be some cross-border criminal factions, and the Romanian government has the duty to investigate whether or not Romanian citizens have fallen prey to such criminal factions".

• Cîţu: "The NBR should have allowed the exchange rate to float freely prior to 2005 as well"

Florin Cîţu told us that in order to prevent this situation, the CHF/RON exchange rate should have been allowed to fluctuate freely in the past as well, "not controlled by the NBR".

He said: "It is not enough for the Central Bank to say that a currency is not safe and that it poses a currency risk. The NBR should have helped citizens understand. How? Let the exchange rate float freely, not keep it under control. Show people the real volatility that the currency in question can have. The Central Bank however, has intervened prior to 2005 whenever it was necessary, and people had the impression that the currency risk wasn't real. Now it is saying that it only intervenes on the leu/euro exchange rate. We are asking too much from society".

• Piperea: "The banks' offers - poison pills given to people"

Banks announce that they are willing to conduct negotiations with CHF borrowers, said Radu Graţian Gheţea, the president of the Romanian Banking Association (ARB), on the 28th of January, emphasizing that the resolution of the problem of CHF loans is in the hands of the two parties: "Banks that have issued loans denominated in Swiss francs must find solutions together with their customers". He says that the solutions will probably be different from one case to the next.

It would seem that CHF borrowers are beginning to receive offers from banks to have their exchange rates frozen, but accompanied, apparently, by certain conditions imposed by the lenders, according to lawyer Gheorghe Piperea, who said: "People are already receiving offers, that sound like this: < We will freeze your exchange rate at 3.8 lei/franc, we will cut your interest rate for three months, but you have to concede that you have negotiated with us and you don't sue us >. These are just poison pills given to people. After they tricked them, called them fools and all kinds of names, they now want to trick them again".

Florin Dănescu, the executive director of the Romanian Banking Association, said, on the 28th of January, that, currently, banks negotiate with any client, any contract clause, but that they have losses to recoup as well.

He said: "The banking industry does not manage just 75,000 customers in its assets, it also manages over 4 million borrowers and 15 million bank deposits. (...) People forget that the Romanian banking industry has never received a public bailout. Then why are we taking so much blame?"

Florin Dănescu said that in the last five years, the Romanian banking industry has seen losses that it could not have imagined 7-8 years ago.

• Gheţea: "Heaven forbid we also hear < Je suis euro >"

The conversion of loans denominated from foreign currencies to lei, regulated through a legislative act, would create an imbalance and could be unconstitutional, Radu Graţian Gheţea said, on the 28th of January: "As for the proposals to convert the loans to lei, the RBA has called out to the NBR since last year. We have received the support of the NBR to have an impact study made on this topic. The study is not encouraging at all when it comes to the effect on the banking system. The results are not public, and we, the RBA, have sent it to the Parliament. I think that the answer of Mr. Cinteză, who was saying that the impact would be rather unpleasant - he used the word < default >, was telling. The issue is particularly delicate. (...) Banks have invited customers to convert their loans, but they received no response. In our opinion, regulating the conversion to lei, regardless of the currency through a legislative act would create an imbalance. (...) It might even be unconstitutional. Why make the conversion only for those who have loans denominated in Swiss Francs? If we think about it, in 2007, the exchange rate for the Euro had reached 3.9 lei, then, in 2008, it fell to 3.2, and now, it has reached 4.5 lei. So far, we haven't heard < Je suis euro >, only < Je suis franc >. Heaven forbid we hear < Je suis euro >, because then, we are going to have < Je suis dollar > as well".

As for the solution proposed by the Ministry of Finance, Darius Vâlcov, to restructure the loans, Mr. Gheţea mentioned that the RBA does not reject this idea, but that the implementation of the application norms is necessary: "The draft to amend the ordinance has been sent to the Parliament by minister Darius Vâlcov. On principle, new elements have appeared that simplify some questions that we had. I suggest every customer go to the bank and try to find the best solution (...) Nowadays we are in a rather effervescent situation, which reflects precisely the lack of knowledge and information that exists in Romania at the consumer level. (...) There are also many juridical persons that have similar problems".

In the opinion of the head of the Romanian Banking Association, a law of the individual insolvency without an impact study is not justified. He claims that the passing in any form of such a regulation could create a moral hazard in the market.

He explained: "The Romanian Banking Association has what is called a dossier containing the statements made concerning the various legislative initiatives on this issue. Ever since the first legislative initiative concerning the insolvency of individuals we have been wary of it, invoking the bad application of the law of insolvency and the bad results of the law of insolvency in the case of judicial persons. We have subsequently taken on a more nuanced position and we said that a law of individual insolvency was needed, but that we need to see whether the needed legislative framework exists. We need to ensure that moral hazard isn't created through this law, meaning that some of the borrowers don't unfairly benefit from its provisions. There are five drafts on this topic in the Parliament. We have answered yes to all of them, with some amendments. Each time we have been criticized and told that the amendments change the law completely. This is the reality. Now we also have the position of the IMF, which said that an impact assessment must be conducted. The judicial system said that not all customers can be managed. Once that study gets done, we will see whether this law, which is normal for a country of the European Union, must be passed.

The impact study concerning the law of personal bankruptcy can be made by many institutions, and the Ministry of Justice should get more seriously involved in this issue, Darius Vâlcov, quoted by Agerpres said on January 28th, in a televised show. "Prior to the letter of the IMF, I publicly came out and said that all of these laws that get passed from now on must be very well thought out. We must not make decisions rashly and it is the Parliament that is the tutelary authority".

The minister expressed his optimism that in the first part of the coming Parliamentary session both Government Emergency Ordinance no. 46/2014 concerning loan restructuring as well as the Law of Insolvency will "exit the Parliament".

The judicial commission postponed, Wednesday, until next week the debate on the draft of the law of individual insolvency, after talks on the amendments.

• Andreea Paul: "820,000 people, defenseless against debt collectors' abusive practices due to the current inadequate laws"

820,000 people are now in foreclosure, as they are "defenseless against debt collectors' debt practices due to the current inadequate laws", says PNL deputy Andreea Paul.

In this context, he asks the Parliament and the Government to "act urgently for the resolution of the serious legislative flaws when it comes to foreclosures. (...) The ECHR has already decided that the loss of a home is one of the worst infringements of the right to respect of the home. The ECHR has also invoked the individual's right to request the examination of the proportionality of the home foreclosure measure".

As the crisis caused by the sudden strengthening of the Swiss Franc, after the Bank of Switzerland removed the exchange rate ceiling imposed in 2011, "will bring about a new wave of foreclosures in the market". According to Mrs. Paul, the Parliament and the Government must discuss three key issues, and foreclosure must be preceded by three essential steps: reviewing the credit contracts and the tracking of any abusive clauses, checking the accuracy of the calculations of the outstanding debts and of the penalties charged and identifying the reason why the debtor has defaulted.

Deputy Andreea Paul said that the parliamentary majority led by the PSD "has called upon" the MPs of the PNL not to attend the works of the Budget Commission, "to prevent the finding of solutions" to the crisis of Swiss Franc denominated loans.

The Swiss Franc fell on Friday on the Romanian market, to 4.26 lei on Friday.