Banks In Hungary May Face Losses On Local Debt Consolidation
- 9 Nov 2012 8:00 AM
Banks could face massive losses, running as high as Ft 100 billion, if the state requests discounts from them when taking over the debt of local governments, Népszabadság reports. The state would pay only 75-80% of the value of what it deems bad or risky loans held by local governments to banks in the process of assuming the debt of municipalities, according to information from Fidesz politicians.
Two weeks ago, Prime Minister Viktor Orbán announced that the state would take on the debt owed by all communities with fewer than 5,000 inhabitants, assuming more than Ft 600 billion total debt of nearly 2,000 municipalities.
Népszabadság presumes that the latest burden placed on banks will probably be discussed in talks with the IMF and EU, if talks resume at all.
Source: Hungary Around the Clock
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