Italy's UniCredit group is considering putting on hold plans to expand its network in Hungary because of an early repayment scheme for foreign currency-denominated mortgages that makes bank cover the cost of a discounted exchange rate, Giani Papa, CEE director for UniCredit unit Bank Austria, said in Wednesday's issue of Austrian business daily Wirtschaftsblatt.
Hungary's Parliament on Monday approved legislation allowing early repayment, in full, of foreign currency-denominated mortgages at an exchange rate well under the market rate. Banks are to pay for the cost of the difference between the two rates.
"The new law will produce shock waves," Papa said. "We won't reduce our presence [in Hungary], but we are considering putting our expansion plan on ice," he added.
Papa said UniCredit is adjusting its expansion in other countries of the region to slower growth.