The new law regarding forex loans passed last Friday could hurt Hungary’s banking sector, said rating institution Moody’s in a report. The legislation allows the Hungarian state to convert forex loans to Hungarian Forint based ones, helping out countless borrowers stuck in bad deals.
Banks could pay up to EUR 2.6 billion (800 billion HUF) in compensation to borrowers after the implementation of the new law, the ratings agency claims. Moody’s estimate put doubles previous numbers, and while the concrete specifics are yet to be decided by parliament this fall, expectations are quite sour.
Austrian bank Raiffeisen said that the new legislation could cost its local branches a total of EUR 120-160 million (37-50 bln HUF), with many speculating that figures similar to this could seriously cripple short to mid-term prospects for banks in Hungary.