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Erste sees retail lending legislation in Hungary raising risk costs

Telco

Austrian banking group Erste expects legislation in Hungary affecting retail loans to raise risk costs, the parent bank announced yesterday.

Erste Group said it expects risk costs to rise from €1.7 bln to €2.4 bln in 2014 as a result of increased provisions in Hungary and Romania. Any potential additional costs related to the complete phase-out of retail FX loans announced by government officials for H2 2014 are not expected, the group added.

The legislation, requiring lenders to refund borrowers for the unfair use of exchange rate margins and unilateral changes to contracts, is expected to be approved by Hungarian MPs on Friday. The legislation is part of a series of measures to assist borrowers with foreign currency-denominated loans, a lending product the government has said it will phase out.

-- Christian Keszthelyi edited the article

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