K&H to set up mortgage bank

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K&H Bank, a unit of Belgiumʼs KBC, will set up its own mortgage bank next year to comply with new regulations requiring mortgage loans to be backed with more long-term liabilities, deputy-CEO Ágnes Baba told Reuters in an interview on yesterday.

"We have decided to establish our own mortgage bank and it was also something of an expectation of us that given our position in the retail sector, this should be the way forward," Baba told Reuters.

The new unit could cost between several hundred million to one billion forints, she added.

K&H could issue HUF 50 bln-90 bln of bonds, she said, adding that the lenderʼs mortgage outlays had reached more than USD 40 bln in January-July.

The National Bank of Hungary is requiring lenders to back at least 15% of their net mortgage loans with long-term liabilities from October 1, 2016, a measure that is expected to spur the establishment of more mortgage banks.

At present, there are only three Hungarian lenders with mortgage units, OTP, UniCredit and FHB, but Erste recently announced it is also establishing its own mortgage bank.

Baba told Reuters there could be a third new player, "but we think that three new participants is what the system can cope with".

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