Hungarian Banks Face High Costs If Government Expands Rate-Cap Scheme, Says Bank Chief
- 20 May 2014 9:00 AM
Expanding the government scheme to cap the exchange rate for forex mortgage repayments may well be a good solution for troubled debtors but would cost the banking sector dearly, Mihály Patai told the press. Patai, recently re-elected as chairman of Hungary’s Banking Association, said a decision by the Kúria, Hungary’s supreme court, on forex loans expected in the autumn would raise banks’ costs, including billions of forints in refunds to clients, he said.
If banks were made to take on the entire burden of the scheme, the interests of forint-based borrowers, as well as Hungary’s 4.5 million account holders would be hurt.
He said the government, however, understood that it is impossible to achieve longterm economic growth without an “active, normally operating” banking system. He noted that last year was the fourth consecutive year when lending fell in volume and real terms, and last year loans were down 38-40% compared with 2008.
“This cannot be sustained in the longer term,” he told the paper. Patai noted that central bank data showed that Hungarian banks had made a combined profit of 67 billion forints (EUR 219.5m) last year. Yet without capital injections by their foreign parent banks the result would have been a loss of 78 billion forints.
Source www.hungarymatters.hu
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