Will the 4,655 borrowers who took out variable rate property loans from BNP Paribas Personal Finance, also called Cetelem in France, win their case? The Paris Court of Appeal will decide the question on November 28. On June 6, 2023, the prosecution found that the subsidiary of the banking group had been guilty of “deceptive commercial practices” and “concealment”. Specifically, between March 2008 and December 2009, BNP Paribas Personal Finance had marketed its so-called “Helvet Immo” real estate loans for a total amount of 800 million euros, or on average 170,000 euros per borrower. After 10 months, Cetelem had also withdrawn these products from marketing, proof, according to the lawyers, of its “toxicity”.
This real estate tax exemption program, intended for seasoned investors, was based on variable, not fixed, rates, as is the case with the overwhelming majority of loans distributed in France. “BNP Paribas earned very good income from this type of product because at that time, variable rates were more attractive. The bank used this argument to attract customers., explains Me Stéphane Ceccotti, lawyer for 70 plaintiffs. Thus, households borrowed money in Swiss francs, but repaid their payments in euros.
Crédit Mutuel: a customer who had taken out a loan in Swiss francs wins his standoff
BNP already condemned
And the story quickly got complicated. Following the financial crisis of 2009, the value of the euro simply plummeted compared to the Swiss franc, leading to an explosion in the monthly repayments of loans granted by Helvet Immo. “The most common case is that of a borrower who obtained 100,000 euros of credit in 2008 and who, 15 years later, still has to repay 100,000 euros. The capital has in fact not decreased,” regrets the lawyer.
At first instance, the Paris criminal court ordered the BNP subsidiary in 2020 to immediately pay 127 million euros in damages to the borrowers, on the grounds of “deceptive commercial practices” and “concealment”. All without waiting for the appeal trial, requested by BNP Paribas. On appeal, Me Stéphane Ceccotti considers that there is only “very little suspense” regarding the judges’ decision. “They have shown great distrust towards BNP Paribas, and compare this judgment on appeal to a delaying tactic by the bank. Clients who have not yet started the process therefore have very good reasons to believe in their victory and to take an interest in the matter!”. Only half of the aggrieved borrowers actually appealed to the courts to resolve their disputes.
Were customers aware of the risks?
The whole question of the trial will consist of quantifying the information provided by the bank to borrowers before subscribing to these risky loans. On this point, a first round was won by BNP Paribas in 2017. While borrowers tried to void their loan contract, the Court of Cassation swept away their hope, considering that the BNP Paribas subsidiary had exercised its duty to advise its clients. Since then, the Court of Justice of the European Union has corrected the situation, considering that the Helvet Immo loans contained an unfair clause sufficient to render the entire contract void. The Court of Cassation therefore had to review its copy in 2022: “Since 2023, all trial judges have applied this case law”rejoices Me Stéphane Ceccotti.
Contacted by Capital, BNP Paribas had not responded to our requests at the time of publication. In its defense, the bank also recalled that the vast majority of its loan was distributed via wealth management advisors. Intermediaries trained by BNP Paribas, but impossible to control in their entirety, lawyer Dan Benguigui, one of the group’s lawyers, told the prosecutor in June.
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