engleski

Did the banks in Croatia have extra interest income from CHF appreciation?

Recent appreciation of CHF has caused uproar in Croatia and other Eastern European countries. Ever since the Swiss central bank has removed parity with the Euro, sudden appreciation of CHF has caused retail annuities tied to the CHF to increase significantly. Once again the issue of the legality and morality of loans in CHF has been brought back to the media spotlight. In Croatia in particular there has been prevalent the argument that the banks have heavily profited from the appreciation of the CHF. Croatian central bank has responded to these allegations with the press release clearly stating that the open currency position of the banks has been around 0, ever since CHF loans started in Croatia, therefore it was impossible for the banks to profit from the CHF appreciation. This paper investigates did the banks have extra income interest income because of the appreciation of CHF even with the open currency position of 0. The answer is yes, however overall profitability of CHF loans as a banking product is doubtful at best.

deposit interest rate ; probability of default ; banks ;

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