More erste clients exit swiss franc loans

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VIENNA Aug 17 Around a quarter of Austrian lender Erste Group Bank's customers with Swiss franc-denominated loans have now switched to euro financing or to loans that amortise rather than come due upon maturity, its the Vienna-based lender said on Friday. The Swiss franc's strength amid the euro zone debt crisis has made it more expensive to service such loans, prompting banks to suggest customers swap out into more conventional domestic financing to avoid currency risk. Erste said a campaign it has run since last autumn had persuaded more than 2,500 customers to switch out of foreign currency mortgages worth around 400 million euros ($495 million).

Another 1,500 foreign currency borrowers had converted loans repayable upon maturity into amortisation loans worth around 270 million euros, it said.

Nearly one in every four private loans in Austria are denominated in foreign currency, with just over 34 billion euros outstanding in Swiss franc loans held by private individuals, it said. Many borrowed in francs to tap low interest rates for mortgages.

At Erste Bank around 14,000 private individuals still have 2 billion euros worth of foreign currency loans. The average loan was around 150,000 euros.