April 27, 2015 / 10:04 AM / 5 years ago

Croatian central bank governor shrugs off calls to resign

ROVINJ, Croatia, April 27 (Reuters) - Croatian Central Bank Governor Boris Vujcic, under fire from holders of loans denominated in Swiss francs, rejected their calls for his resignation on Monday.

More than 60,000 Croats have Swiss franc loans, taken out in the mid-2000s as a cheaper alternative to other commercial loans, and have been struggling with repayments since the currency surged in January.

Thousands of those loan holders took to the streets of Zagreb on Saturday, demanding that local banks restructure the debts, and Vujcic step down for failing to take action.

“Of course I won’t resign. I’m the only who was warning about the risks related to Swiss francs 10 years ago. Now, those who kept silent then want to make me responsible,” Vujcic told an economic panel in the northern Adriatic resort of Rovinj.

Some 60,000 Croatians hold around 27 billion kuna ($3.9 billion) of Swiss franc-denominated loans.

The Croatian government, which faces a general election later this year, has fixed the Swiss franc at 6.39 kuna for one year to put a cap on the mounting debts.

The holders of Swiss franc loans, grouped in an association called Udruga Franak, want the loans to be converted into the national currency and the interest rates to be reduced to the level where they stood when the loans were taken out.

Vujcic said such a conversion was not an option.

“We clearly said that such a conversion would jeopardise the country’s financial stability by negatively affecting the level of currency reserves,” he told the panel.

Both the government and the central bank have said banks and loan holders should hold talks to find a solution. If none is found, the government has said it is ready to intervene.

A conversion into euro-denominated ones is seen as the most likely solution, as the central bank keeps the kuna in a managed float against the euro. ($1 = 6.9964 kuna) (Reporting by Zoran Radosavljevic, writing by Igor Ilic; Editing by Kevin Liffey)

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