Banks are calling the VfGH because of interest-free corona credit moratoriums

The interest-free moratoria are a thorn in the side of the banks © APA/THEMENBILD/HERBERT NEUBAUER

Because of the loans that were legally deferred during the Corona period, for which banks are not allowed to charge interest, more than 400 institutes are going to the Constitutional Court (VfGH). They see a violation of the principle of equality and an encroachment on their property. A public hearing by the Constitutional Court will take place on Tuesday.

The Corona crisis has caused financial difficulties for many consumers due to unemployment or short-time work. At the beginning of the pandemic, the government therefore created special regulations to relieve consumers – among other things, banks were required to defer consumer loans in the event of customers experiencing financial difficulties due to the pandemic. After two extensions, the deferral period was ten months – from April 1, 2020 to January 31, 2021.

However, the regulation did not clearly define whether the contractually agreed interest may be charged during the period of the moratorium. The banks interpreted the law in such a way that during the deferral period only the charging of interest on arrears is prohibited, but not the charging of normal contractual interest.

The Association for Consumer Information (VKI) saw things differently and sued BAWAG. At the end of 2021, the Supreme Court (OGH) made the decision that the banks are not allowed to demand contractual interest for the period of the deferral and that unjustly charged interest must be repaid.

However, the domestic banks see this as an encroachment on their property and a violation of the principle of equality. Because while the institutes fall back on loan agreements for the period of the deferral, landlords, for example, get their rents – which were also deferred due to corona – repaid including interest, according to the banks’ argument.

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The government, on the other hand, does not see the deferral regulations for rents and consumer loans as comparable. Furthermore, it is argued that the interest on rental agreements is different from that on loan agreements and that the risk of a sharp increase in the interest debt is therefore significantly higher due to the compound interest effect.

A total of 403 domestic banks have joined the application, including all relevant banking sectors – Raiffeisen sector, savings banks and Volksbanks – are represented. They are represented by Alexander Grau, a lawyer at DCS law firm. On the part of the government, representatives of the Constitutional Service, the Ministry of Justice and the Ministry of Health and Social Affairs are taking part in the hearing.

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