Banks are Required to Pay Again

HUNGARY - Report 27 Jun 2014 by Istvan Racz
Executive Summary The 10-year story of FX-denominated lending by domestic banks and non-bank financial intermediaries to households is approaching its end. These loans, predominantly borrowed in Swiss francs in order to obtain substantially lower interest than HUF rates, became a nightmare from the crisis years of 2008-2009, as a sharp rise in the CHF/HUF rate led to a 40% average revaluation loss through April 2014. Total losses have reached HUF 2800bn or over 9% of GDP. At present, there are about 115,000 non-performing mortgage loans, whose borrowers are facing an average debt of 130% of...

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