* Govt seeks final solution of households' fx debt
* New c.bank head Matolcsy could seek help from Swiss
* SNB says has not been contacted by Budapest
* Govt wants conversion of fx loans into forint-another
(Adds SNB comment, more details, analyst)
BUDAPEST, March 6 Hungary's government is
seeking a definitive solution to the country's problems with the
mass of home loans denominated in Swiss francs, the daily Magyar
Nemzet wrote on Wednesday, citing unnamed sources.
Financial markets are watching closely for any sign of major
policy action from new Governor Gyorgy Matolcsy, appointed to
head the bank last week after two years in charge of one of
Europe's most radical economic policy drives.
The paper, which is close to the ruling Fidesz party, wrote
in a front page article that the government was mulling the
conversion of Swiss franc-denominated household mortgages into
forints or possibly euros.
The plan was one of several solutions under consideration,
the newspaper said, adding that it would have to involve
cooperation between Matolcsy and Swiss National Bank Chairman
SNB spokesman Walter Meier said the bank had not been
contacted by the National Bank of Hungary about this topic.
Another newspaper Nepszabadsag said on Wednesday, also
citing unnamed sources, that the government was planning a
solution to help those debt holders who are more than 90 days
behind with their payments.
It said the government, with the involvement of banks would
help these loan holders by converting their loans into forints.
Hungarian households and businesses have suffered for years
from ballooning debt service costs on loans denominated in Swiss
francs as the forint weakened against a booming franc,
eroding domestic consumption and hurting banks' loan books.
Prime Minister Viktor Orban - who faces elections next year
- has said repeatedly in recent days that foreign currency debts
were a key problem his cabinet sought to ease. His new Economy
Minister Mihaly Varga has echoed that remark several times.
Governor Matolcsy told a parliament hearing last week that
he "really did not like" foreign currency loans.
A reduction in the foreign currency loan stock would reduce
Hungary's exposure and vulnerability but markets will need more
clarity on exctly what the government and Matolcsy plan.
In a previous scheme drafted by the government, households
had the opportunity to repay their foreign currency mortgages
early at well below market exchange rates, which caused hundreds
of billions of forints in losses for commercial banks. Then the
National Bank of Hungary provided foreign currency funding from
the reserves to allow banks to make the repayments.
"Arguably, the main risk is that with Governor Matolcsy now
in charge of the FX reserves and the 2014 elections are
approaching, the current conversion programme could be more
significant in size than the previous one, draining reserves too
fast," said Gabor Ambrus at 4CAST in London.
In another scheme still in effect, indebted households can
pay their monthly instalments at a more favourable exchange rate
and pay the difference only years later.
(Reporting by Marton Dunai, additional reporting by Caroline
Copley in Zurich; editing by Patrick Graham)