BNP Paribas Personal Finance, known in France as Cetelem, BNP Paribas' main credit subsidiary, has been heavily convicted by the Paris Criminal Court. At issue was the marketing in 2008 and 2009 of home loans denominated in Swiss francs and repayable in euros. The BNP Paribas credit subsidiary was accused of concealing the risks of this loan from 4,600 borrowers, risks that materialized when the Swiss franc soared after the 2008 economic crisis. BNP Paribas Personal Finance has stated that it will appeal its conviction.
Conviction for "misleading commercial practices
After a fortnight's trial, the Paris Criminal Court has delivered its verdict: BNP Paribas' credit subsidiary has been found "guilty of deceptive commercial practices" and of "concealing" this offence.
As such, it was ordered to pay themaximum fine of €187,500 and a total of several tens of millions of euros in damages to the 2,300 borrowers who had joined the civil action. Two consumer associations, CLCV and UFC-Que Choisir, were each awarded more than a million euros in damages for harm to the collective interests of consumers. Legal costs will also be reimbursed to the plaintiffs, up to a maximum of €3,500 per person.
The court also decided on provisional execution of its decision, with "payment of the damages awarded". Consequently, even if BNP Paribas Personal Finance appeals, it is obliged to pay these sums promptly.
High-risk loans
The court was ruling on the marketing, in 2008 and 2009, of "Helvet Immo" home loans. "Helvet Immoloans, denominated in Swiss francs and repayable in euros. The contracts made no mention of the foreign exchange risk, which was a feature of these loans.
However, the 2008 financial crisis caused the euro to fall against the Swiss currency, and the 4,600 borrowers saw their repayments rise sharply. Today, many borrowers still owe more capital than they borrowed in 2008 or 2009, even though they have been repaying these loans for over ten years.
The court's decision was greeted with joy and relief by the plaintiffs. Charles Constantin-Vallet, lawyer for 1,300 civil parties, said: "For my clients, this is a tremendous victory and a turning point in this case: no French court will be able to ignore this conviction from now on."
BNP Paribas Personal Finance, denying any illegal practice, had pleaded for acquittal. It has since announced that it will appeal the decision.