Hungary govt, banks sign agreement on escape route for FX borrowers

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The government and the Hungarian Banking Association signed an agreement on Thursday that gives an escape route to borrowers with foreign currency-denominated loans, National Economy Minister Gyorgy Matolcsy said.

Mr Matolcsy said the series of talks with banks were very difficult but also very successful, in the end producing an agreement that shares the burden between the banking system, borrowers and the government, and which could reduce repayments of clients who join by 30-35%. The five-year agreement will reduce the burden of forex borrowers by HUF 900bn, he added.

The government will cover HUF 300bn of the amount and the banking sector HUF 600bn, he said. The government’s contribution will be made through the bank levy, from which banks can write off the burden of early repayment, he added.

Hungarian Banking Association chairman Mihaly Patai said the government saw the troubles of forex borrowers as a social problem, thus making the agreement of great importance.

Mr Matolcsy said the government had made a growth pact with the banking association that was expected to expand available credit for domestic SMEs, home-buyers and applicants for European Union funding.

Mr Patai said he thought the market would react positively to the agreement and it would have a good effect on the forint’s exchange rate.

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