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Banking Association urges court review of FX law

Analysis

The Hungarian Banking Association has issued a request to the president of Hungary to order the Supreme Court (Kúria) to review the approved legislation on FX borrowers’ relief, chief secretary Levente Kovács announced on Hungarian public radio today.

The foreign-exchange loan law, approved on Friday, requires banks to compensate Hungarian borrowers for part of the costs of losses incurred due to the dramatic drop in the value of the forint since the financial crisis of 2008. Banks have complained that the law makes them bear too much of the burden, and by some estimates it may cost the banking sector as much as HUF 1 trillion.

Kovács said he believed the measures are on a “brutal scale” and said that some banks would require capital injections to pay out compensation to their borrowers. Parent banks have declared that they will make the injections in a timely manner, in order to preserve the stability of the banking system, he added.

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