Foreign Currency Loans: Austrian Banks Appreciate Hungarian Decision
Austrian banks reacted positively to the announcement of the Hungarian government to participate in costs for the conversion of foreign currency loans.
Erste Group and Raiffeisen Bank International appreciate that Hungary participates in the costs for the conversion of foreign currency loans taken by Hungarian households. Bank Austria did not comment the announcement.
In September, Prime Minister Viktor Orban declared that Hungarians are allowed to repay the foreign currency loans at favorable conditions. As a result, Austrian banks, which are highly engaged in Hungary, had to build high provisions.
The amount of costs for the banks is not clear yet. A spokeswoman from RBI emphasized that the difference between the legal exchange rate and the real exchange rate will be shared between the state and the banks. Besides that, the Hungarian bank tax will be reduced to 50% in 2013. Conversion costs of these foreign currency loans will be credited. By 2014, the bank tax will be lowered to a “commonly accepted percentage”. Until now, costs for the banks of the conversion total € 300m.
Additionally, the agreement contains the obligation of the banks to write-off 25% of the loan for persons not able to repay and to convert into the local currency Forint. The Hungarian Minister of Economics said: “The agreement has a time horizon of five years. The burden for the state totals € 977, whereas the banking sector has to bear costs of € 1.95bn.” Nevertheless, the legal proceedings against the Hungarian government at the EU level remain.