U.S. private equity group Advent wants a cut in the price of Austrian “bad bank” Heta‘s Balkan network because of its exposure to Swiss franc-denominated loans, Heta said on Thursday.
Under the terms of the deal completed last year, Advent and the European Bank for Reconstruction and Development (EBRD) agreed to pay up to 200 million euros ($216 million) for the network, depending on its 2014 and 2015 earnings. Austria has said 50 million euros have already been paid.
“Advent has officially informed Heta Asset Resolution on the subject of the forced conversion of franc-denominated loans in southeastern Europe and has also already asserted demands in relation to incurred and expected damages in Montenegro and Croatia,” a Heta spokesman said by email, confirming a report in Austrian newspaper Der Standard.
Heta was reviewing Advent’s demands with its advisers, “taking into account the agreed guarantee and release terms in the share sale contract with Advent/EBRD,” the spokesman said.
He declined to comment on the amount of loans involved.
Croatia’s parliament passed a law in September forcing banks to convert Swiss franc-denominated loans into euros, at heavy cost to lenders, a move that banks have challenged. Montenegro has taken similar steps.
Most of Croatia’s Swiss franc loans were made during the credit boom in the 2000s, driven by low interest rates, and were primarily used for mortgages or buying commercial property. When the Swiss central bank lifted its cap on the value of the franc and the franc surged, they became far more expensive to service.