* Loans to be converted at rate they were taken out
* All political parties backed, against central bank advice
* Parliamentary election due on Dec. 11
(Adds central bank, leu, detail)
By Radu-Sorin Marinas
BUCHAREST, Oct 18 Romania's lower house of
parliament unanimously endorsed a bill on Tuesday to convert
Swiss franc loans into local currency at historical rates, going
against central bank recommendations and economists' pleas for
prudence in an election year.
The bill, which cleared parliament in a 248-0 vote backed by
all political groupings, applies to all Swiss franc loans
irrespective their value, scraping a proposal last week to allow
the conversion of loans below 250,000 Swiss francs.
Before the world financial crisis, thousands of central and
east Europeans took out low interest rate loans in currencies
such as the Swiss franc, only to find these loans hard to
service after their own national currencies dived in value.
A drive by all political parties to offer legislative
support to Swiss franc borrowers has intensified this year and
as groupings position for a parliamentary election on Dec. 11.
"This is not a law against the banking system. It's a
reparatory piece of legislation for borrowers," Liviu Dragnea,
head of the country's biggest party, the leftist Social
Democrats told deputies.
A central bank spokesman said the bank would not comment
following the vote.
The bank had previously estimated that such conversions,
under which the loans will be changed into local currency at a
rate corresponding to when the loan was taken out, would have an
impact of about 2.4 billion lei ($600 million) on local banks
because of the exchange rate difference.
The leu was flat after the vote, trading at about
4.5085 versus the euro.
Out of a total number of about 70,000 Swiss
franc-denominated loans, there have been so far about 57,000
conversion and restructuring requests submitted by borrowers of
which about 34,000 have been resolved through direct negotiation
between the parties.
In contrast to its ex-communist peers, Swiss franc credits
in Romania accounted for about 5 percent of the total, with the
low level due to the central bank's communication at the time
that highlighted the dangers of currency exchange risk.
December's election will produce a new parliament that will
propose a prime minister to replace incumbent Dacian Ciolos who
came to power last November with a caretaker team of technocrats
for a limited, one-year mandate.
Opinion polls predict the leftist Social Democrats likely to
garner most votes, around 38-40 percent, followed by the
centrist Liberals with about 30-32 percent, and a political
structure in parliament virtually unchanged from present.
(Editing by Alison Williams)