Hungary central bank may force banks to borrow in longer maturities-report

MBH Jelzalogbank Nyrt

06/02/2015 15:15

BUDAPEST, Feb 6 (Reuters) - Hungary's central bank may push 
banks into borrowing through longer-term securities to match 
financing portfolios more closely to the home loans they are 
funding, a report on business website portfolio.hu said on 
Friday without naming its sources. 
    A central bank spokesman declined comment. 
    The report said that from mid-2016 at least 30 percent of 
all home loans would have to be financed by mortgage bonds or 
other mortgage-backed securities, curbing the risks of maturity 
mismatches among banks that tend to borrow via cheaper, 
shorter-term securities. 
    Prime Minister Viktor Orban's government and Hungary's 
courts have made sweeping changes to the heavily taxed sector in 
recent months including making banks return about 3 billion 
euros ($3.4 billion) to borrowers for cost hikes deemed unfair. 
    Banks would either have to form their own mortgage units or 
have 30 percent of their mortgage loans refinanced by a mortgage 
bank, the report said, estimating the total additional issuance 
needed at up to 1 trillion forints ($3.7 billion). 
    The changes could put OTP Bank  OTPB.BU , FHB Bank  FHBK.BU  
and UniCredit  CRDI.MI  at an advantage over their peers as 
these lenders already have mortgage units, the report said. 
    It also noted that commercial banks would face substantial 
additional costs when launching their own mortgage units as 
longer-term financing is more expensive. 
    The report also said the central bank was considering other 
forms of financing, such as covered bonds or mortgage-backed 
securities, which could allow commercial banks to secure 
longer-term financing directly and more cheaply. 
 
 (Reporting by Gergely Szakacs; Editing by Louise Ireland) 
 ((gergely.szakacs@thomsonreuters.com; +36 1 327 4748; Reuters 
Messaging: gergely.szakacs.thomsonreuters.com@reuters.net)) 
 
Keywords: HUNGARY LOANS/