French bank BNP Paribas could pay out 600 million euros after reaching a deal to compensate clients judged to have been deceived over mortgages issued in Swiss francs, as reported by Agence France-Presse (AFP).
Both BNP Paribas and the CLCV consumer association have confirmed that a deal had been reached to compensate approximately 4,400 clients who had contracted mortgages with low-interest rates. I Photo: Can Pac Swire Flickr
Both BNP Paribas and the CLCV consumer association have confirmed that a deal had been reached to compensate approximately 4,400 clients who had contracted mortgages with low-interest rates.
These mortgages, issued in 2008 and 2009, were denominated in Swiss francs, and reimbursement was made in euros at current market rates.
The Swiss franc is widely considered a safe-haven investment, and during the global financial crisis, it appreciated strongly against other currencies as investors sought refuge from market turmoil.
As a result, BNP Paribas customers with those mortgages faced sharply higher costs to reimburse their mortgages.
The deal between BNP Paribas and the CLCV was reached after an appeals court in late November ruled that the BNP Paribas subsidiary issuing the mortgages had not properly warned investors of the currency risks involved.
According to a source, most borrowers would receive between 120,000 and 150,000 euros, putting the total cost to BNP Paribas at between 400 and 600 million euros.