On 18 October 2016, a new law for the amendment and supplementation of the Government Emergency Ordinance no. 50/2010 on consumer loan agreements (the “New Law”) was approved by the Romanian Parliament. The New Law is currently with the General Secretary for the exercise of the right to address the Constitutional Court of Romania, prior to being sent to the President of Romania for promulgation.
The New Law sets-forth several mandatory rules regarding the conversion in the national currency of Romania (RON) of ongoing consumer loans granted in Swiss Francs (CHF) irrespective of their value (including consumer loans with regard to the sale, respectively, purchase of certain real estate property, loans secured by a mortgage on real estate property, loans involving a right related to a real estate property).
The mandatory conversion rules will apply even if the consumer loans were outsourced, transferred or assigned or are subject to undergoing enforcement proceedings, regardless of the creditor, status or form of the enforcement. In this latter case, the consumer may address the competent courts for the conversion of the credit in accordance with the New Law.
Some of the main novelties brought by the New Law include:
a) creditors are required to carry-out the conversion in RON of the outstanding CHF consumer loans, at the exchange rate of the National Bank of Romania valid upon the execution of the CHF loan agreement. Violation of this provision may result in the application of fines and other administrative sanctions.
b) upon receipt of a conversion request, the credit institution must offer the consumer a simulation of the repayment schedule denominated both in RON and CHF;
c) the CFH conversion must be documented through an addendum to the loan agreement signed with the consumer, without additional costs or security interests/guarantees being required from the consumer. Costs related to the converted loan must be negotiated with the consumer in good faith and with professional diligence so that the consumer’s payment obligations do not become more onerous;
The addenda should not contain other provisions than those required by applicable legislation under the sanction that such provisions may be deemed null and void;
d) credit institutions or non-bank financial institutions must communicate to the consumer (i) the addendum to the loan agreement within a 30 day term and (ii) a new repayment schedule of the converted loan period by no later than the next repayment date; and
e) at the consumer’s request, banks which applied a voluntary conversion scheme may revert to the initial CHF loan agreement and carry-out the CHF conversion in compliance with the CHF Conversion Law. Although the text is not entirely clear, it would seem that banks have a right (rather than an obligation) to revert to the initial CHF loan arrangements and apply the new conversion rules.
The manner in which these provisions will be construed in practice can have serious consequences on banks which already applied successful voluntary conversion schemes in Romania.
The New Law is due to enter into force within 60 days after its publishing with the Official Gazette of Romania.