UPDATE 1-Hungary's banks offer new forex loan relief plan
* Banks put forward relief scheme proposal, pressured by government
* Banks willing to take cost of hundreds of billions forints
* Talks to resume on Thursday - chairman of Bank Association (Adds more detail, background)
By Sandor Peto
BUDAPEST, Aug 27 (Reuters) - Hungary's Bank Association said on Tuesday it was ready to bear most of the burden of providing relief to foreign currency borrowers with a scheme of its own costing the banks several hundred billion forints.
Bank Association Chairman Mihaly Patai said the plan would be spread over several years and meet the government's requirement for a drastic reduction in borrowers' monthly repayments.
The government, preparing for elections next year, said last month that it wants to get rid of foreign currency mortgages that have turned into a millstone round the necks of many Hungarians with housing and other loans mainly in Swiss francs.
Earlier measures ordered by the government in 2011 caused big losses to banks, but alleviated only partly the plight of many people with foreign currency mortgages caused by heavy depreciation of the forint.
The country's mostly foreign-owned banks, which had feared the new programme could inflict further hefty losses on them, presented their own proposals to Economy Minister Mihaly Varga on Tuesday.
The government has said it may contribute to a relief scheme to convert loans to forints. The central bank on Monday proposed gradual conversion and forgiving part of principal payments at an annual cost of up to 40 billion forints ($180 million).
Patai told reporters after the talks that banks would bear a burden of "several hundreds billions of forints over a period of several years" based on the association's proposal.
"The main aspect of our proposal was to observe the aspects that the government had requested and (that) monthly repayments should fall drastically, it's a very important part of our proposal," Patai said.
"In our proposal, the banking system would bear a very big part of the burden ... and the state budget a smaller part, and clients would also bear a small part (of the costs)."
Patai declined to comment when he was asked whether the proposal had common points with the central bank's idea which included a conversion of monthly loan repayments at a preferential exchange rate of 180 forints to the Swiss franc.
"They (the proposals) do not meet on the exchange rate, this one is a totally different concept, but of course also there are common points," he said. "I think it will be possible to find a solution in the end."
The only other detail that he was willing to reveal was that the association's proposal would cover all foreign currency borrowers including those who are unable to repay their loans. ($1 = 222.8682 Hungarian forints) (Reporting by Sandor Peto; editing by Stephen Nisbet)