OTP Bank president-CEO Sándor Csányi said late on Sunday that retail foreign currency-denominated loans cannot be converted to forint loans.
Speaking on a television program, Csányi said if foreign currency-denominated loans were to be converted to forint-denominated loans now, retail borrowers' repayment burdens would grow around HUF 230 billion, or 20%, per year because repayment installments would rise considerably due to the interest rate difference. Csányi added, however, that troubled borrowers must be given assistance, asserting that the government and banks can indeed work together in this area.
Csányi primarily blamed the problem of troubled borrowers on the government's economic policy, not the banking system.
The OTP Bank president-CEO said that when these borrowers took out their forex loans five years ago, the forint exchange rate was around 230-250 to the euro compared to above 270 at present, which means that their debt has increased in forint terms. “This is clearly the result of the irresponsible budget management of recent years - except perhaps for 2008”, Csányi remarked, adding that confidence had been shaken in Hungary and the Hungarian currency as a result of the deficit of close to 10%, leading to a weakening of the forint and an increase of debt in forint terms.
“The government encouraged forex lending, followed the wrong economic policy and budget policy, and the monetary policy must be cited as well”, the OTP president-CEO said. If the forint had not been overappreciated at the time, borrowers would have thought twice before taking out the loans whether they should be indebted in forints or foreign currency, Csányi said.
He stated that the central bank's task must not be the protection of the value of the forint alone - it must also cooperate with the government in order to help boost economic growth. The central bank's inflation-tracking monetary policy resulted in a very strong forint, Csányi said, adding that a weak forint would be tolerable to some extent for borrowers of forex loans, while it would be an efficient incentive for the economy. Csányi noted calculations show that a forint rate of 300 or more to the euro would lead to a contraction of Hungary's economy, while a forint rate of 285-290 to the euro would exercise a positive influence. The OTP Bank president-CEO said a happy medium is what Hungary should aim for. (MTI-Econews)