Foreign currency loans – Strengthening proposal to prevent banks from escaping clearing

The Good Finance faction is pushing for a tightening of the law on the conversion of foreign currency loans to prevent banks from shirking their accountability obligations, the leader of the larger government party told MTI on Thursday.

The bill would tighten the interest rate premium on forint loans

The bill would tighten the interest rate premium on forint loans

As a replacement for foreign currency loans. The lowest interest rates are needed to prevent banks from taking back what they would otherwise have to give back to people as a result of clearing, he explained.

The politician said that the law proposes to cut the interest rate premium by almost 100 basis points.

The reason for the proposal was that

If banks were left with too much room for maneuver in setting interest rates, they would try to escape the clearing obligation through interest rates. Banks may try to raise interest rates on new forint loans, he added, noting that they did not consider it sufficient to regulate the interest period, ie to introduce a five-year unchanged rate.
Antal Rogán said further measures are being proposed as a guarantee that the installments on the exchange rate barrier would remain unchanged.

The goal is for exchange rate hijackers to pay off the lower installments they have already made on the new forint loan, he explained.

The leader of the group said they also recommend that when banks settle with foreign exchange hedges, they should first deduct from the pool account the amounts previously paid by the foreign currency creditor.
According to Antal Rogán, the repayment installment of persons who entered the exchange rate barrier has fallen by 25-30 percent, as now the foreign currency borrowers. The difference was collected by banks on a pool account in the form of forint loans.

According to a Good Finance politician


It can be a serious result for exchange rate hitters if the low installment payment remains and they can write off all or most of the savings account as a result of the settlement.

He has indicated that his proposals will be submitted to the House by the Legislative Committee of the National Assembly and have already been decided by the Good Finance faction and will be supported in a parliamentary vote on Tuesday (MTI).

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