Euribor Loan Agreement

December 8th, 2020 5:23 pm

To make matters even more absurd, the NBS certified the report on the original loan agreement, although the agreement includes the EURIBOR clause. She changed her mind a year later, when she received the amended loan agreement, which provides for an increase in loans. The reasons for this change in attitude are unknown, while the statement that the clause violates the general principles of Serbian law is not persuasive. To get things done, the parties reported here removed and removed the zero-rate clause from their loan agreement. However, the consequences of a coup by an administrative authority on legal certainty and predictability when they take over the role of legislator or justice persist. Many banks lend money by providing mortgages. In many European countries, the interest rate payable on a short-term loan or mortgage (short-term fixed-rate period) follows the Euribor rate. As soon as the Euribor rate rises, the interest rate to be paid also increases and vice versa. If a person chooses a mortgage based on a variable interest rate (also known as a variable rate or variable rate mortgage), it is announced in advance that he will pay the Euribor rate (often the Euribor rate 1 month or 3 months) plus a fixed commission, z.B Euribor -1%. Recently, the National Bank of Serbia (NBS) refused to certify a report on an amended loan contract between a foreign bank and a Serbian corporate borrower, since the original loan contract, governed by Serbian law, contained an Euribor clause. The “Zero Floor-Euribor” clause means that, if negative, Euribor is considered void for the purposes of the loan agreement and the bank is entitled to the full margin. The NBS found that the zero-shore Euribor violated the general principles of Serbian contract law enshrined in the Obligations Act.

Such an interpretation of Serbian contract law must be told both for procedural and substantive reasons.

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