Varga: Hungary’s FX Loan Bill “Greatest Of Its Kind”
Tamás Székely 2014.11.25.
Laws on foreign currency loan conversions awaiting a parliamentary vote this week will reduce the outstanding principal of the average debtor by 1.5 million forints (EUR 4,920), according to Mihály Varga, the economy minister.
The package, which he called “the greatest and most comprehensive” proposal of its kind in the world, would also extend the option of converting forex loans into forint based ones to debtors who have participated in the government’s exchange-cap programme. In its original form, the proposal was not aimed at including that group in the conversion scheme.
Meanwhile the National Bank of Hungary (MNB) confirmed, that the banking sector had a combined after-tax loss of 333.7 billion forints (EUR 1bn) in the first to third quarters as lenders made provisions for refunds to be paid under borrowers’ relief legislation approved in the summer. Lenders set aside provisions of 669.4 billion forints in Q1-Q3.
Under the borrowers’ relief legislation, lenders must compensate retail clients for using exchange rate margins when calculating repayments on foreign currency-denominated loans and for making unilateral changes to both FX and forint loan contracts. The refunds, which willbe accounted against loan principal, are expected to come to some 1,000 billion forints.