French banking giant BNP Paribas has reached a $658 million settlement with regulators to compensate customers who were not properly informed about risky mortgages.
The loans in question were taken out in 2008 and 2009 in Swiss francs, which, especially during times of uncertainty, are often viewed as a safe haven currency.
However, since the loans were repayable in euros, the bank’s customers debt essentially got larger as the franc massively appreciated against the euro from 2008 onward.
According to a statement from France’s Consommation, Logement et Cadre de vie (CLCV), BNP Paribas failed to communicate to its customers that they were facing foreign exchange risk upon the repayment of their loans.
CLCV was pursuing separate legal action in an effort to nullify the mortgage contracts, and the current agreement with BNP Paribas provides for the cancellation of all of the loans.
In a statement to Reuters, BNP Paribas Personal Finance says,
“We confirm that, at Personal Finance’s suggestion, an agreement has been reached with the CLCV association to offer an amicable solution to customers who so wish.”
The CLCV says that about 4,400 clients could benefit from the settlement, with each one reportedly receiving between 120,000 and 150,000 euros, which would create a total cost of 400 and 600 million euros, or about $658 million.
BNP Paribas is currently the ninth-largest bank in the world with over 2.849 trillion in assets under management.Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
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