Report: Vehicle, personal loan FX conversion could cost OTP HUF 6 bln
Photo by Jessica Fejos
A subsidy for retail borrowers who opt to convert their foreign exchange personal and car loans into forints could cost OTP Bank about HUF 6 bln at group level, before taxes, in the event that all the bank’s FX loans are converted, the financial institution said today, according to Hungarian news agency MTI.
(Photo: Jessica Fejos)
Under an agreement the Hungarian government signed with the Hungarian Banking Association on Wednesday, lenders are required to convert approximately HUF 305 bln of their FX vehicle and personal loans at the request of clients. Banks in Hungary were previously required to convert their stock of FX mortgages into forints.
The agreement on Wednesday locked in rates for the conversion at the National Bank of Hungaryʼs euro and Swiss franc fixings on August 19, but the more favorable rates used earlier for the FX mortgage conversion will be applied to clientsʼ balances, MTI reported, noting that the difference between the rates will be shared in equal parts by banks and the state.
"By assuming the enactment and execution of the agreement, the FX risk of household FX consumer loan contracts will cease for OTPʼs Hungarian group members, resulting in a more favorable risk profile both for affected clients and for OTP Group," OTP reportedly said.
OTP said it had purchased Swiss francs necessary for the conversion at a central bank tender yesterday. Swiss franc-based loans were once the most popular retail lending product in Hungary.
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