In the short term, no central bank measures are necessary on the domestic investment market because of the sharp strengthening of the Swiss franc, the National Bank of Hungary (MNB) said. Data submitted so far show a few hundred investors have had losses adding up to a combined 10 billion forints, the central bank said.
Just ten investment funds lost more than 5% of their net asset value, or a combined 24 billion, on January 15, the day the Swiss National Bank (SNB) eliminated the franc’s exchange rate floor against the euro. The scale of the loss is equivalent to about 0.5% of all managed assets in the sector, the central bank said.The MNB requested information from investment companies and funds on the impact of the SNB measure already last week. The central bank and financial market watchdog oversees 25 investment companies and branches in Hungary. About half of these offer FX market services online. More than 1,400 other foreign investment companies offer crossborder services in Hungary, but these are not overseen by the MNB, the central bank said.
Meanwhile an MNB official said that Hungary’s central bank might launch schemes similar to quantitative easing flagged by the European Central Bank (ECB) in order to safeguard its competitiveness. Márton Nagy, MNB’s managing director said at a Euromoney conference in Vienna that the new schemes could be launched similar to MNB’s lending for growth programme. Nagy also said that more banks might land in state hands, after the government last year agreed to buy MKB Bank and Budapest Bank.
”Further bank purchases by the state cannot be ruled out, but currently there are two banks, MKB and Budapest Bank, whose situation needs to be handled by the government and the central bank,” he said. Hungary’s central bank will soon launch a “bad bank”, Nagy confirmed. This will buy up commercial real estate loans from banks on a voluntary basis and will start operating once its internal rules are defined, based on consultations with the bank sector, the EU and the ECB, he said, adding that the bad bank’s purpose was to enhance bank lending.
via hungarymatters.hu and MTI photo: budapest-foto.hu