BNP Paribas has reportedly reached an agreement with French consumer group CLCV for compensation ranging between €400m and €600m to settle the Swiss franc loan case.

The settlement follows the sentencing of the lender’s consumer credit unit for engaging in deceptive practices related to Swiss-franc mortgages, reported French news publication Le Parisien.

BNP Paribas Personal Finance (BNPPF), operating under the Cetelem brand, faced a verdict in November 2023, being found culpable for withholding information about the risks associated with its Helvet Immo Swiss franc loan. This particular loan, tailored for tax-free rental investments, saw the signing of approximately 4,600 contracts during the period of 2008-2009.

The intricacies of the loan arrangement unfolded when clients, who had engaged in loans denominated in Swiss francs but were obligated to repay them in euros, witnessed a substantial escalation in repayments. The surge was attributed to the decline of the euro against the Swiss currency following the financial crisis in 2008.

The ruling from a Paris appeals court held BNP Paribas’s consumer finance unit accountable, declaring it “fully responsible for the damage” suffered by a group of customers who took legal action against the bank.

The clients, entangled in loans denominated in Swiss francs but redeemable in euros, experienced financial strain as the Swiss currency emerged as a safe haven amid a global credit crunch.

In a statement, BNP Paribas Personal Finance unit said: “An agreement has been found with the CLCV association to offer an amicable solution for clients who request it.”

Separately, CLCV said that nearly 4,400 who had subscribed to the Helvet Immo real estate loan contract could be compensated by the French bank.