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Gov't to decide on setting up company to manage property of defaulted borrowers in mid-October

The concept for the planned national asset management company designed to acquire and manage the properties of borrowers who have defaulted on their mortgage payments will be prepared by October 15, when the government will decide on setting up the company, National Economy Minister Gyrgy Matolcsy said.

The company will be set up within a few months, and is likely to be established as a unit of state-owned development bank MFB, Matolcsy said during an appearance on a program of the commercial television channel TV2.

Troubled borrowers could request conversion their foreign-currency loans into forint loans, and if they can change their ownership into a lease if they are unable to service the loans.

The national asset-management company will have the money needed, financing itself from the loan market since there is no funding available for this purpose in the central budget, Matolcsy said. The company may get funding from banks too, the economy minister added.

The ministry of national economy expects the state asset-management company to help some tens of thousands people, the Matolcsy said. There are about 93,000 borrowers of foreign-currency loans who are in deep trouble the economy minister said, citing figures from the banking association.

Matolcsy also reconfirmed that the government targets a general government deficit below 3% for 2011, reiterating that the target can be met without fiscal tightening.

The target is calculated under current methodology, without taking into account the effect of pension reform, Matolcsy said when asked whether the target could be met if the EU does not accept a proposal to deduct pension-reform-related costs from the deficit. Hungary is one of nine member states supporting the proposal.

The government expects to save HUF 150 billion-to-HUF 200 billion from cutting red tape next year, but the consolidation of state-owned companies could also result in additional revenue, the economy minister said. The state should be reformed, Matolcsy added. The government will maintain the district-heating and gas-price subsidies for the citizens most in need, as well as the banking tax, he said. (MTI – Econews)