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Financials

UPDATE 1-Hungary central bank takes emergency steps to help businesses

BUDAPEST, March 16 (Reuters) - Hungary’s central bank announced emergency steps on Monday to help businesses, boosting the range of collateral it accepts from banks and calling on lenders to apply a loan repayment moratorium for firms hit by the coronavirus economic fallout.

It also imposed a moratorium on repayments on loans extended under the central bank’s massive Funding for Growth Scheme, which had provided small businesses with cheap loans.

The NBH said in a statement that performing corporate loans in domestic banks’ balance sheets totalled close to 3.6 trillion forints, and it would apply a 30% haircut on those, boosting the range of collaterals that can be used and thus also lifting banks’ lending potential.

“As a result, the total value of collateral that can be used ... will expand by more than 2.5 trillion forints ($8.10 billion),” the NBH said in a statement on its website.

“Accepting corporate loans as collateral substantially supports corporate lending and raises its value from the aspect of liquidity....and (the measure) also improves banks’ liquidity situation.”

The National Bank of Hungary, Central Europe’s most dovish central bank, announced the steps as the forint fell to new record lows of 344.50 to the euro, and the region’s stock markets plunged across the board as investors offloaded assets fretting over the fallout from the spread of the coronavirus.

The NBH also offered more fx swaps to the banking sector providing forint liquidity at a weekly tender.

Earlier in the day, Prime Minister Viktor Orban said Hungary would need monetary and fiscal tools to tackle the expected grave economic impacts.

$1 = 308.65 forints Reporting by Gergely Szakacs and Krisztina Than; Editing by Toby Chopra

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