Márton Nagy, managing director of the Hungarian National Bank told daily Magyar Hírlap that the forex loans law could make banks lose out EUR 2.2 billion (700 billion HUF), although it could potentially reach EUR 2.5 billion too. Nagy also added, that according to their calculations, three or four major, international banks could leave Hungary. These institutions, however, will not only be replaced by Hungarian banks, but new international credit institutions could invest in Hungary, said Nagy.
Parliament passed legislation earlier nullifying forex loans. The law states that after bypassing the unfair elements of the forex contracts, it maintains the original contract. Rate spread has also been nullified, instead the amount of repayment installment will be defined based on the Hungarian National Bank’s official exchange rates.
The planned December conversion of loans could potentially reduce individual loan burdens by 25-40%. The government will not tie loans to current exchange rates, instead a method will be devised to spread the risk between banks and state. The Hungarian Banking Association previously stated that the usage of rate spread is lawful and commonly used internationally, also adding that the banking sector’s unilateral contract changes were all corresponding with regulations.
Source: Magyar Nemzet, photo: public domain.