BNP Paribas subsidiary fined for deceptive marketing of risky mortgages

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BNP Paribas subsidiary fined for deceptive marketing of risky mortgages
Credit: © Reuters.

PARIS - BNP Paribas (OTC: BNPQY ) Personal Finance (BNPPF) has been convicted by a Paris court today for deceptive marketing practices related to its "Helvet Immo" Swiss-franc mortgages. The financial product, which was marketed during 2008-2009, led to increased repayments for customers following the Swiss franc's surge in value after the financial crisis.

The court has imposed a fine of €187,500 on BNPPF for these practices. Moreover, the lender has been confirmed to owe approximately €130 million in damages to claimants who were misled by the marketing of these loans. These loans were initially intended for tax-free rental investments but became a financial burden for borrowers due to unforeseen currency fluctuations.

The original fine was levied on February 26, 2020, after it was found that BNPPF had concealed the risks associated with the Helvet Immo loans. These loans, amounting to 4,600 contracts, were signed during the volatile period between 2008 and 2009. The borrowers faced increased repayment amounts as the euro declined against the Swiss franc, which was not adequately communicated by BNPPF at the point of sale.

The complexity of the case, with several hundred borrowers affected and the intricate nature of individual losses, has led to the postponement of the precise compensation verdict. The Paris Court of Appeal is expected to announce the verdict in April, providing some clarity to the affected parties on the compensation they are due.

InvestingPro Insights

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