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BNP Paribas has agreed to pay up to €600mn to settle a long-running dispute with French customers who alleged they were misled into taking out risky mortgages in Swiss francs.
French consumer group CLCV said on Tuesday that it had reached a deal with BNP on behalf of some 4,400 customers who were hit when the Swiss currency started to strengthen against the euro at the onset of the eurozone’s debt crisis in 2010.
The settlement with the customers, who were pursuing BNP for compensation through a civil case in the French courts, will cost the bank between €400mn and €600mn, according to a person familiar with the matter.
While the French customers were attracted by the lower interest rates on mortgages dominated in Swiss francs, they claim they were not sufficiently warned of the currency risks that the loans carried.
Many of those affected lived in the Alpine region near the Swiss border and took out a mortgage product called Helvet Immo, which was supplied by a subsidiary of BNP Paribas, to acquire small buy-to-let properties.
The strengthening of the Swiss franc left some with monthly payments that exceeded the original size of the mortgages, which averaged about €130,000.
CLCV said it was “satisfied to have reached a friendly outcome, in the interest of the consumers concerned and without having to wait for (court) decisions to be taken”.
BNP said in a statement that the settlement was available to all affected customers, but declined to give further details.
The agreement comes after judges in a separate criminal case centred on the same loans had ruled against BNP in an appeals hearing in November, when the bank was found guilty of deceptive commercial practices and ordered to pay some €200mn in damages.
BNP was not the only eurozone lender to offer Swiss franc mortgages. Polish consumers were among the biggest users of such products, sparking legal action that ended up at the European Court of Justice with a decision in favour of the borrowers in 2019.
This story has been amended to clarify nature of Helvet Immo
