(Adds Hungary to headline)
BUDAPEST, July 28 Hungary's comprehensive relief
plan for foreign currency borrowers poses no risk of toppling
banks, Economy Minister Mihaly Varga was quoted as saying in an
interview published on Monday.
Prime Minister Viktor Orban's government has drafted
legislation to help Hungarians struggling to manage foreign
Once popular for their low interest rates, the loans turned
sour when Hungary's forint currency weakened.
The first step of the process will be to settle past fee and
interest rate hikes on the loans.
The debt will then be converted into forints, possibly
around the end of the year.
Hungary's central bank has estimated the cost to banks from
the first step at 700 billion to 900 billion forints ($3.05
billion to $3.93 billion), far exceeding the bill from a
previous relief plan.
"Fears of any (bank) failures are unfounded," minister Varga
was quoted as saying in an interview with business daily
"In the course of discussions on foreign currency loans, the
banks have signalled that, if needed, they will get capital from
their parent banks. Or if not, they will settle the bill
Banks in Hungary include units of Belgium's KBC,
Austria's Raiffeisen Bank and Erste Bank,
Italy's UniCredit and Intesa Sanpaolo, and
Varga said banks met capital adequacy requirements and
foreign owners have affirmed their commitment to Hungary.
German state-backed lender BayernLB recently sold its
Hungarian MKB unit to the Hungarian government.
Varga said at this stage there was no room for any big cuts
in special taxes levied on some business sectors but added that
Hungary might over time consider reviewing these, including a
hefty bank levy, if economic growth accelerates.
($1 = 229.26 Hungarian forints)
(Reporting by Gergely Szakacs; editing by Jason Neely)