September 27 (SeeNews) - Croatia is set to address a letter to the European Commission on Wednesday regarding the legislative measures taken by the country for the conversion of Swiss franc loans into euro, which the EU earlier said were not in line with its principles, Zagreb-based media reported on Tuesday.
The government always looks after the national interest and protects the taxpayers and the budget, finance minister Zdravko Maric told broadcaster HRT but declined to disclose the stance taken by the country in the letter of response.
On June 16, Croatia received a letter of warning from the European Commission which said that the country's legislation on loan conversions has shifted all of the conversion costs onto banks and that its retroactive application jeopardised the principle of legal security.
Croatia had a deadline until August 16 to respond to the letter, but it was later prolonged until the end of this month, HRT reported.
A letter with a formal warning is the first step usually taken by the the European Commission against a member state when it considered to be violating European law. If a country does not respond to the letter or does not provide a satisfactory explanation, the Commission sends a reasoned opinion. If, however, no response to the opinion is received, then the Commission may refer the case to the EU court.
Media have reported that in its letter Brussels sought a balance between consumer interests and the need to protect the capital market.
In September last year, the Croatian lawmakers approved a bill for the conversion of Swiss franc loans that aims to ease the burden on affected borrowers. Since then, European banks have booked huge losses.
At the beginning of this year, Italy's UniCredit Group, one of eight banks which offered loans denominated in Swiss francs in Croatia, said that the conversion of franc mortgage loans into euro cost the bank a net 138 million euro ($154.6 million) in 2015.
The Group recently announced it will file a suit against Croatia with the Washington-based International Centre for Settlement of Investment Disputes.
($=0.8897 euro)