• Switzerland's news in English

French towns trapped by Swiss franc rise

Matthew Warren · 6 Sep 2011, 11:26

Published: 06 Sep 2011 11:47 GMT+02:00
Updated: 06 Sep 2011 11:26 GMT+02:00

Facebook Twitter Google+ reddit

Hundreds of towns, local authorities and public bodies around France are struggling to pay back loans that were indexed against the euro-franc exchange rate as a result of the rise in value of the Swiss currency.

Tuesday's Le Parisien newspaper named some of the many districts affected, which it claims include Saint-Tropez in the south and the department of Seine-Saint-Denis north of Paris.

The problems stem from low-interest loans that were taken out on the condition that if the euro-franc exchange rate fell below a certain level, rates would become progressively higher.

The Swiss franc has fallen in ten years from a rate of around 1.5 francs to the euro to a close on Monday of 1.1 francs. At its strongest, in October 2007, the euro bought almost 1.7 francs.

Le Parisien claimed that some of the interest rates have now soared to 20 percent. Some local authorities have decided to take legal action to try to avoid the punitive charges.

"We contest the legality of these loans where the interest rates and the penalty calculations are not clearly stipulated," lawyers working for the mayor of Saint-Cast-le-Guildo in the northern Brittany region told Le Parisien. The town is taking action against the bank Dexia, which sold it the loan.

"We are bound hand and foot," said the mayor, Jean Fernandez. "I'm a maths teacher and even I find it impossible to understand the formula that Dexia put in this contract."

The newspaper claimed that many more local authorities, emergency services, hospitals and other public bodies could be trapped in loans with high interest rates.

The news came on the same day that the Swiss National Bank announced it is setting a minimum exchange rate of 1.2 francs to the euro, although even this rate is unlikely to help many of the struggling loan holders.

See also: Swiss stocks jump on currency peg news



Matthew Warren (news.france@thelocal.com)

Facebook Twitter Google+ reddit

Your comments about this article

2011-09-09 15:36:09 by Swissrambler
Still...they must have actually read and signed the contract pertaining to the loan agreement, right? And no-one mentioned anything when it all worked well in their favour....
Today's headlines
Swiss woman wins headscarf court battle
Photo: Jack Guez / AFP file picture

A Swiss court has ruled against a company that fired a longtime employee after she began wearing the Muslim headscarf, marking one of the first such rulings in Switzerland, media reported Sunday.

Montreux throws hat in Olympic rings
Could Montreux host the 2026 Games? Photo: Ivo Scholz/Swiss Tourism

Montreux is to put itself forward as the host city for the 2026 winter Olympics as part of a potential bid by the cantons of Valais and Vaud.

Geneva car share scheme could help reduce city traffic
Catch a Car is aimed at short hops within a city. Photo: Catch a Car

Catch a Car, already in Basel, launches in Geneva next month.

Swiss women will ‘work for free’ for the rest of year
Female employees in Switzerland earn 19.3 percent less than their male colleagues. File photo: Randy Kashka

Switzerland's gender pay gap means from today, Friday October 21st, women in the country will effectively be working for free for the rest of 2016.

Swiss luxury watches stolen in Paris raid
Police outside the Girard-Perregaux watch store on Thursday. Photo: Bertrand Guay/AFP

The 10 Girard-Perregaux watches are worth half a million euros in total.

Brother-in-law arrested over murder of Swiss teacher
The victim worked in a school in Stabio, near the town of Mendrisio. Photo: Oliver Graf

The primary school teacher was found dead in Ticino earlier this week.

Inside Switzerland’s largest nuclear bunker – 40 years on
Designed to house 20,000 people, the bunker was built in and over two motorway tunnels. Photo: Unterirdisch Ueberleben

The Local takes a tour of the Sonnenberg bunker in Lucerne, opened 40 years ago at the height of the Cold War.

Ten Swiss ski resorts named most expensive in Europe
File photo: Renato Bagattini/Swiss Tourism

Skiers in Switzerland pay the highest prices for their ski passes of anywhere in Europe, according to research.

Eco group fights Bern over wind farm plans
There are currently more than 30 wind farms in Switzerland. Photo: Alpiq

Wind turbines are “gigantic and destructive” machines, says Paysage Libre Suisse.

Vegan wins battle to be accepted by Swiss army
Antoni Da Campo will now carry out his military service. Photo: Antoni Da Campo

A Swiss man who was told he would not be accepted for military service because of his strict veganism has finally succeeded in making the army change its mind.

Sponsored Article
How to vote absentee from abroad in the US elections
Photo: Richard Juilliard/AFP
Man makes Geneva airport bomb threat ‘for a joke’
Sponsored Article
Last chance to vote absentee in the US elections
Photo: AFP
Solar Impulse team reveals plans for unmanned plane
File photo: Martin Abegglen
Swiss to vote on passport rules for 3rd gen foreigners
Sponsored Article
How to vote absentee from abroad in the US elections
Photo: AFP
Swiss wingsuit hotspot Lauterbrunnen won’t impose ban
Photo: Swiss Tourism
Six reasons Switzerland isn’t as boring as you might think
Photo: Swiss Tourism
Report: Switzerland one of world’s best places for girls
Photo: The Local
Thief returns Swiss cow bells worth thousands
File photo: Wikimedia Commons
One in three rapists isn’t locked up: statistics
Photo: activistin.ch
Tampon-tax protest turns Zurich fountains red
Photo: AFP
Geneva police to lift ban on bearded officers
Photo: Marcel Gillieron/AFP
Suicide chef’s restaurant keeps Michelin stars
Photo: Lara de Salis
11 things the Swiss get tired of hearing abroad
Photo:  Ivo Scholz/Swiss-image.ch
Survey: expats in Switzerland have money but few friends
Photo: AFP
Swiss press criticize Bern’s 'capitulation' on immigration
Photo: Jura Trois Lacs tourism
German ex-policeman is Swiss city’s new hermit
Photo: Dmitry A. Mottl
Ticino votes to favour local workers over foreigners
Photo: file
Some deodorants could cause breast cancer: Swiss study
Photo: Royal Savoy
In pictures: Inside the latest Swiss luxury hotel
Photo: AFP
Geneva airport bomb hoaxer faces 90,000-franc bill
Photo: Schaffhausen police
Mother leaves toddler son alone in car to go clubbing
Photo: Fabrice Coffrini/AFP
Swiss populist attacked by knife-wielding pensioner
Photo: File
Bern argues over passports for 3rd generation foreigners
Photo: Broad Bean Media
Muslim pupils must shake hands – ‘no ifs and buts’
jobs available