MNB executive director foresees changes in the sector
Inspired by Irish and Croatian models, the National Bank of Hungary (MNB) is currently working on proposals for the operation of the “bad bank”, as well as personal bankruptcy issues in order to help non-performing mortgage loan holders, MNB’s executive director Márton Nagy told Hungarian daily Magyar Hírlap today.
The executive director said he expects the establishment of three new mortgage banks in the near future. He foresees that five large universal banks will stay in Hungary, with three of them able to set up their own mortgage units in line with an MNB requirement stating that, as of the second half of 2016, commercial banks will be required to issue mortgage bonds to finance at least 15% of their outstanding home loans. For this, the MNB is planning to create a so-called Mortgage Financing Adequacy Ratio (JMM).
Nagy noted that the fine-tuning process of MNB’s Funding for Growth Scheme will not only continue, but the central bank is also considering extending the scheme to funding construction work in residential communities.
As for MARK Zrt., the so-called “bad bank”, Nagy cited some foreign examples to explain how it could work. For example, he said, in Croatia, borrowers in very difficult circumstances were allowed to apply for the cancellation of their debts. This “fresh-start” scheme would result in approximately 60,000 citizens’ debts being erased by banks. Nagy added that the Irish central bank decided to set targets for commercial banks regarding the management of problem mortgage loans, and falling behind the target would be sanctioned by stricter impairment regulations.
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