Hungarian Prime Minister Viktor Orbán, often criticized for punishing banks, is being hailed as a hero for warding off financial disaster with his quest to rid the country of mortgages worth billions of Swiss francs, economic news portal Bloomberg.com said on Friday evening. Bloomberg cites László Szabó, president of Budapest-based Concorde Asset Management, who said: “This was top notch, […] this is the time to congratulate them for the incredible timing.”
Orbán in November forced Hungarian banks to make financial arrangements to convert 3.3 trillion forint ($12 billion) in foreign-currency mortgages, overwhelmingly denominated in Swiss francs, into local currency. The move, to be completed this year, prevented a 700 billion-forint jump in household debt when the Swiss National Bank (SNBN) set the franc free yesterday.(bloomberg.com)
Even Financial Times had to acknowledge Hungary’s “fortunate” solution. “Mr Orbán could not have known the SNB’s plan in advance, so the timing of his foreign exchange loan conversion plan – which began in November – seems very fortunate indeed. The MNB could hardly conceal its delight that the conversion plan came in the nick of time for Hungarian borrowers”, FT blogger Andrew Byrne wrote yesterday.
Mihály Varga, the Hungarian economy minister, also told earlier, that the Swiss central bank’s removal of a minimum franc-euro rate had confirmed that the Hungarian government made the right decision of eliminating forex loans from the country’s banking system in 2015. Through fixing the exchange rate of franc based loans at 256.5 forints and at 309 forints for euro-based ones the government has saved debtors from having to repay an increase of their debt amounting to 500 billion forints, the minister said.
via bloomberg.com and ft.com photo: Julien Warnand / MTI