news letter

Weekly newsletter

Forex loans: Banks To Start Compensation Process This Week

By Tamás Székely // 2015.03.02.

As of this week, bank customers will feel some tangible effects as banks are to repay income generated by unfair, unilateral modifications to contracts and by exploiting bid-ask exchange rate gaps, economy minister Mihály Varga said at a press conference.

Varga pointed out that under the phasing out of forex loans the volume of loans exchanged into forint-denominated facilities totalled some HUF 3600bn, which measure has shielded the homes of half a million families from extreme, unpredictable exchange rate fluctuations. These modifications may involve as many as 2.4 million contracts at banks and 3 million contracts at financial enterprises. Financial institutions are thus set to face huge logistical and technical challenges; for example the letters to be handled at a large bank are estimated to weigh some 16 tons, Varga said.

Forex mortgage borrowers are scheduled to receive information letters from financial institutions detailing compensation and the forint conversion between 2 March and 30 April, Mihály Varga explained. These letters must clearly state the amount of compensation to be repaid to the customer or subtracted from the existing amount of debt. The letter must also reveal how much is still left of the total debt following the compensation, the rate of interest to be paid, tenure and monthly instalments. In case of loan contracts which have already expired the compensation amount must be repaid, while in case of existing loan contracts monthly instalments must be reduced.

Financial institutions are required to use calculation methods of the National Bank of Hungary for the reckoning of the compensation amount. The Economy Minister also stressed that the verdict of the Constitutional Court, delivered on January 2015, confirmed that the law on the compensation of banks’ clients is in harmony with the Fundamental Law of Hungary, therefore its implementation cannot be bypassed by legal bickering.

via photo: