EBRD agreement touchstone for talks on FX car loan conversion

MNB

The government and banks used a previous agreement with the EBRD as guidance during talks on the conversion of foreign currency-denominated car loans into forints, the head of the Hungarian Banking Association told Hungarian news agency MTI.

"We have finally reached the point at which Hungaryʼs financial sector will implement the conversion of the remaining retail FX car and personal loans into forints within a regulatory framework. We have made it through the period of negotiations with the ministry in charge of the conversion and the central bank, during which time the agreement with the EBRD was observed," Levente Kovács told MTI.

Under the EBRD agreement, the government promised to consult with lenders before introducing measures that could burden them.

National Economy Minister Mihály Varga said a week ago that the government would discuss a proposal to assist borrowers with foreign currency-denominated car loans at a cabinet meeting at the end of August.

The government announced plans to assist borrowers with FX car loans in July.

Hungarians have more than 200,000 FX vehicle and personal loan contracts with a value of almost HUF 300 bln. Some 30,000 of these borrowers also have a mortgage, which presents risk of cross-contamination.

The government earlier mandated the conversion of FX mortgages into forints.

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