OTP Bank commits to mortgage business


OTP Bank undertook an “unconditional and irrevocable obligation” to its mortgage and leasing units, despite the effects of the recently approved "FX-loan" borrowers' relief legislation, the bank announced today.

The legislation means that banks are required to retroactively compensate borrowers for fluctuations in the foreign exchange rate and unilateral changes to contracts. It especially effects mortgage holders whose loans were pegged to the value of the euro or the Swiss franc, and it is expected to cost the banking sector has a whole as much as HUF 900 bln. Nonetheless, OTP reiterated its commitment to offering mortgages.

OTP said the law would effect OTP Mortgage Bank, Merkantil Bill and Property Investments Bank and OTP Real Estate Lease, and the bank promised “to eliminate the negative effects on the financial positions of the companies caused by the act, to the extent of ensuring regulatory compliance and maintaining continuous and stable operations in the terms stipulated in the statement of commitment given by OTP Bank Plc to the companies.”

The law means that the bank may be forced to pay refunds of as much as HUF 8.1 bln, OTP Mortgage Bank said. According to the provisions made by the bank, the negative effect on pre-tax profit will come to HUF 6.7 bln, the bank added.

The bank said is expecting that compensation for unilateral changes to contracts will come to HUF 68.8 bln. As for compensation due to customers because of foreign exchange provisions in retail loans, the bank readjusted its estimate slightly lower, saying they will have to pay around HUF 25 bln.

The legislation invalidating unilateral changes to loans affects almost HUF 90bn of OTP Bank's stock of FX loans and some HUF 20bn-30bn of forint loans, the bank said.


CIG Pannónia Board Proposes HUF 18-per-share Dividend Figures

CIG Pannónia Board Proposes HUF 18-per-share Dividend

Hungarian Lawmakers Ratify Finland's NATO Accession Parliament

Hungarian Lawmakers Ratify Finland's NATO Accession

IBS Reaches 50-50% Gender Ratio in Management HR

IBS Reaches 50-50% Gender Ratio in Management

Sümeg Castle Reopens History

Sümeg Castle Reopens


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.