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Coronavirus & Suspended Loan Payments: Banks Prepared to Work Together with Gov’t

MTI-Hungary Today 2020.03.19.

Finance Minister Mihály Varga met representatives of the Hungarian Banking Association on Thursday to discuss a government decree on suspending payments of principal, interest and fees on all retail and corporate loans.

Varga said the government had weighed up the state of the financial sector and decided that it was stable and sound, the finance ministry said in a statement. Last year was one of the banking sector’s most profitable years in a decade, he noted.

Varga said talks between the government and the association were ongoing.

Hungarian Banking Association chairman András Becsei said the banking sector is prepared to work together with the government on protecting against the fallout of the novel coronavirus epidemic in the country.

As soon as the detailed rules are codified, bank clients will be informed, he added.

Varga said contractual obligations to make repayments on loans would be suspended automatically.

Prime Minister Viktor Orbán announced the repayment moratorium among other measures to ease the economic impact of measures to contain the spread of the coronavirus.

The Hungarian Banking Association said in a separate statement on Thursday that borrowers who want to continue to pay the installments on their credit during the moratorium may do so by making a declaration.

The association said the length of the moratorium will extend beyond the period expected for managing the crisis and into the period during which the economy will be restarted.

“In such a situation, a coordinated and all-encompassing common economic package is absolutely necessary, one in which Hungarian banks will play a role of key importance,” it added.

The association said it would be “necessary” to scrap additional burdens on the banking sector to ensure sustainable financing during the reconstruction of the national economy, adding that it would ask for the bank levy and all bank sector duties to be phased out from January 1, 2021.

Featured photo illustration by Tibor Illyés/MTI