Hungary FX loans to be converted at market rate -media report

MBH Jelzalogbank Nyrt

22/10/2014 10:20

BUDAPEST, Oct 22 (Reuters) - Hungary's government plans to 
convert household foreign currency loans at the prevailing 
market exchange rate sometime in the first half of next year, 
financial news website portfolio.hu reported on Wednesday, 
citing unnamed sources. 
    A spokeswoman at the Economy Ministry said in an emailed 
response to questions from Reuters that there was no final 
decision on the matter yet. 
    If foreign currency loans are converted at the spot rate, 
that could be positive for Hungary's banks. Some analysts had 
speculated that banks might be forced to convert the loans at a 
discount to market rates to help households. 
    Portfolio.hu said the government planned to submit a bill 
setting the parameters of the conversion procedure, along with a 
batch of other banking system reforms, to parliament on Nov. 4. 
    Many Hungarian households took out foreign currency loans, 
mostly mortgages, when the forint was strong but got caught out 
when the currency weakened sharply during the 2008 financial 
crisis. 
    The government is trying to help households cope with their 
losses by converting the loans into forints and other measures. 
    Analysts say Hungary's banks might then try to seize market 
share by competing to offer cheaper loans for borrowers to 
refinance their loans.  
    Heavily-taxed banks in Hungary already face costs of about 
700 billion to 800 billion forints ($2.9 billion to $3.3 
billion) from the settlement of past fee and interest rate rises 
on household loans, which courts ruled were unfair. 
    However, the Supreme Court ruled in June that foreign 
currency borrowers bearing the risk of exchange rate 
fluctuations was not unfair. 
    Banks operating in Hungary include Austria's Erste  ERST.VI  
and Raiffeisen  RBIV.VI , Italy's Intesa  ISP.MI  and UniCredit 
 CRDI.MI , as well as Hungarian lender OTP  OTPB.BU . 
 (1 US dollar = 240.69 Hungarian forint) 
 
 (Reporting by Gergely Szakacs; Editing by Susan Fenton) 
 ((gergely.szakacs@thomsonreuters.com; +36 1 327 4748; Reuters 
Messaging: gergely.szakacs.thomsonreuters.com@reuters.net)) 
 
Keywords: HUNGARY FXLOANS/