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Hungary's ruling party plans to resolve FX loan problem-lawmaker
March 19, 2014 / 7:46 AM / 4 years ago

Hungary's ruling party plans to resolve FX loan problem-lawmaker

BUDAPEST, March 19 (Reuters) - Hungary’s ruling Fidesz party aims to resolve the problem of remaining foreign currency loans if it wins a parliamentary election, as widely expected, on April 6, a senior Fidesz lawmaker said on Wednesday.

Foreign-currency mortgages were popular in Hungary before the 2008 global financial crisis. Since then, the forint has weakened and loan payments have soared, leading to widespread non-payment.

Gergely Gulyas said Fidesz would wait for Hungary’s top court, the Kuria, to decide on some aspects of the loans, which could happen in May. Depending on this ruling, if necessary, the new parliament could pass legislation soon afterwards, he said.

“We would like all borrowers to be able to repay (loans) at a fixed exchange rate,” Gulyas, deputy head of the Fidesz parliamentary group, told private television TV2. He declined to say what this exchange rate would be.

But Gulyas reiterated that those who borrowed in forints should not be in a worse situation after the new measure than Swiss franc mortgage holders.

Prime Minister Viktor Orban’s centre-right government says foreign currency-denominated loans exploit ordinary Hungarians. It wants to implement a relief scheme, for which banks will probably have to foot part of the bill, but says it will wait for legal issues to be ironed out before taking any new steps.

Gulyas said the aim was to negotiate with the banks but there would be a solution even if they cannot reach agreement.

“What we can promise now is that there will be a solution for the remaining 400,000-500,000 loan contracts as well by the end of the next term (of the government),” he said.

Gulyas welcomed a decision by Hungary’s Constitutional Court on Monday, which ruled that loan contracts may be modified retroactively by law in exceptional cases.

Banks that could be affected by a new relief scheme for foreign currency borrowers include units of Belgium’s KBC , Austria’s Raiffeisen Bank, Erste Bank and Italy’s Unicredit. Banks have already lost more than a billion euros in a 2011 relief scheme. (Reporting by Krisztina Than; Editing by Gareth Jones)

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