During the 1st quarter of 2020, the outstanding volume of foreign currency loans to private households compared with the previous quarter fell by -4.4% or € 590 million, or by almost € 2 billion (-13.7%) in comparison with the 1st quarter of 2019. The outstanding volume has decreased by -75.7% adjusted for exchange rate effects since its high point in 2008. In absolute terms there are still € 13 billion outstanding in foreign currency loans. The proportion of foreign currency loans to the total loans granted to households has already been reduced to 8.1%; at the height of the foreign currency lending boom it was just shy of one-third (31.8%). 96.2% of foreign currency loans are denominated in Swiss Franc, the remainders almost entirely in Japanese Yen. Since the start of 2008 the Swiss France has strengthened by 56.3 % against the Euro. During the 1st quarter of 2020, the Swiss Franc exchange rate varied between CHF 1.0535 and CHF 1.0865 to the Euro. These are the findings of the FMA Survey on the Development of Foreign Currency Loans for the 1st Quarter of 2020.
“The economy fall-out of the current COVID-19 crisis once again plainly show how important the sustainable granting of credit is for banks as well as for their customers. We also view this as confirmation of the path we already took back in 2008, which we have consequently pursued, to remove highly speculative foreign currency loans from the market as a product for end consumers: on the one hand by prohibiting the granting of new loans to private households, and on the other hand by ensuring that the banks in the case of existing loans are required to provide consistent advice about how the risks are to be limited – especially also by attractive offers to convert to financing denominated in Euro,” remarked the FMA’s Executive Directors, Helmut Ettl and Eduard Müller.
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