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Banks urge Brussels to take action against early FX repayment scheme

Eight banks with businesses in Hungary have pressed the European Commission to take action against a Hungarian government scheme allowing early repayment of foreign currency-denominated mortgages at discounted exchange rates, leaving lenders to cover the difference, Reuters reported on Tuesday.

The CEO or CFO of BayernLB, Erste Group, Intesa Sanpaolo, KBC, Raiffeisen Bank International and its parent Raiffeisen Zentralbank, Oesterreichische Volksbanken, and UniCredit said the scheme was a "blatant violation" of their rights in a letter sent to Michel Barnier, EU commissioner in charge of regulating finance, Reuters said.

"We call on the Commission to take urgent and immediate action in order to stop the infringement of fundamental freedoms and basic principles of the EU," the banks said in the letter. "We are committed to continuing the dialogue that we have started with your services and would welcome your support in bringing effective action to stop and remedy the treaty violations by Hungary," they added.

Data from financial market regulator PSZÁF show the scheme cost banks about HUF 44bn by the end of October, about a month after its launch.