Economy
Hungarian bank chiefs want to end FX mortgage repayment scheme
Speaking at a conference organised by the central bank (NBH), Tamás Erdei, Chairman-CEO of MKB Bank said it is no question that the bank tax needs to be phased out, or at least reduced to a rate that is normal in European terms.
The local crisis management - the special levy on the financial sector and the early repayment scheme, which have trigger an asset-side adjustment at the banks - has made Hungary’s foreign currency loan portfolio even more vulnerable, he said.
In his view, it is of paramount importance now that Hungary reaches a “sensible agreement" with the International Monetary Fund (IMF).
The Hungarian banking sector requires EUR 15 bn worth of external refinancing, while the need for recapitalisation is constant, but profitability cannot be ensured for the parent banks
As a consequence of such factors it is unlikely that activity in the Hungarian banking sector will miraculously take off any time soon, Erdei said. “If we want to reduce the loan/deposit ratio to 100%, due to the adjustment on the asset side Hungary’s GDP would decline 10%," he added.
A pénzügyi szektor naponta kétmilliárd forint veszteséget könyvel el a végtörlesztés miatt, és még hátra van három hónap, ezt nehéz elmagyarázni a tulajdonosoknak - hívta fel a figyelmet
Radovan Jelasity, Chairman-CEO of Erste Bank Hungary said the local financial sector incurs losses of HUF 2.5 billion every day due to the government’s early repayment scheme. “And it’s three more months to go. It’s difficult to explain this to the owners," he added.
He reminded that as the result of the Vienna Initiative foreign parent banks maintained their Hungarian exposure in 2009 and 2010. The question is whether they will do the same after the programme allowing FX mortgage borrowers to repay their debt in one go at discount rates, he added.
He said it would be highly important to find a solution for the high stock of FX loans once and for all and to let the owners of the banks know how much more this will cost them.
Gyula Fatér, member of the Board of Directors at Budapest Bank said it is a persistent problem that households’ savings cannot finance the required growth of GDP. It is no question that the loan-to-deposit ratio (which is nearly 130% in Hungary) needs to decrease significantly. In time there will be only forint-denominated mortgage loans in Hungary, therefore it is becoming increasingly important to raise HUF funds. The big question is how the banking sector will handle this, he added.
He noted that stability requires transparency (in economic policy) not only in Hungary but also on a European level.
Júlia Király, Deputy Governor of the NBH, said the current problems with loan and deposit stocks cannot be whisked away. There is no instant one-off cure either to the problems of FX debtors or to the high loan/deposit ratio, she added. In our mind we have a stable, transparent and competing bank system, but in order to achieve these we’ll need a transparent economic policy environment, Király emphasized.
The local crisis management - the special levy on the financial sector and the early repayment scheme, which have trigger an asset-side adjustment at the banks - has made Hungary’s foreign currency loan portfolio even more vulnerable, he said.
In his view, it is of paramount importance now that Hungary reaches a “sensible agreement" with the International Monetary Fund (IMF).
The Hungarian banking sector requires EUR 15 bn worth of external refinancing, while the need for recapitalisation is constant, but profitability cannot be ensured for the parent banks
As a consequence of such factors it is unlikely that activity in the Hungarian banking sector will miraculously take off any time soon, Erdei said. “If we want to reduce the loan/deposit ratio to 100%, due to the adjustment on the asset side Hungary’s GDP would decline 10%," he added.
A pénzügyi szektor naponta kétmilliárd forint veszteséget könyvel el a végtörlesztés miatt, és még hátra van három hónap, ezt nehéz elmagyarázni a tulajdonosoknak - hívta fel a figyelmet
Radovan Jelasity, Chairman-CEO of Erste Bank Hungary said the local financial sector incurs losses of HUF 2.5 billion every day due to the government’s early repayment scheme. “And it’s three more months to go. It’s difficult to explain this to the owners," he added.
He reminded that as the result of the Vienna Initiative foreign parent banks maintained their Hungarian exposure in 2009 and 2010. The question is whether they will do the same after the programme allowing FX mortgage borrowers to repay their debt in one go at discount rates, he added.
He said it would be highly important to find a solution for the high stock of FX loans once and for all and to let the owners of the banks know how much more this will cost them.
Gyula Fatér, member of the Board of Directors at Budapest Bank said it is a persistent problem that households’ savings cannot finance the required growth of GDP. It is no question that the loan-to-deposit ratio (which is nearly 130% in Hungary) needs to decrease significantly. In time there will be only forint-denominated mortgage loans in Hungary, therefore it is becoming increasingly important to raise HUF funds. The big question is how the banking sector will handle this, he added.
He noted that stability requires transparency (in economic policy) not only in Hungary but also on a European level.
Júlia Király, Deputy Governor of the NBH, said the current problems with loan and deposit stocks cannot be whisked away. There is no instant one-off cure either to the problems of FX debtors or to the high loan/deposit ratio, she added. In our mind we have a stable, transparent and competing bank system, but in order to achieve these we’ll need a transparent economic policy environment, Király emphasized.
