Gov’t early fx-mortgage repayment scheme to cost OTP Bank HUF 40bn this year

MNB

OTP Bank will sustain around HUF 40bn in losses this year as a result of the government’s early repayment scheme for foreign-currency home loans, OTP Deputy CEO Laszlo Bencsik announced on Friday.

Mr Bencsik said that 14,838 OTP Bank borrowers with HUF 82bn in home loans had indicated as of November 11 that they intended take advantage of the early repayment option.

The government’s early fx repayment scheme launched on September 29 permits borrowers to make a full early repayment of foreign-currency-denominated mortgages at a discounted exchange rate. Banks are left to cover the difference between the discounted rate and market rates.

Mr Bencsik remarked that the government made a wise decision to enter talks with the International Monetary Fund regarding taking out insurance that would boost investor confidence in the country without increasing state debt. Mr Bencsik said that the immediate strengthening of the forint and decline in CDS spreads following the announcement of the talks on Thursday afternoon were evidence of the market’s positive reaction to move.

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