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Hungary banking system stable, but there are limits to what it can bear

In spite of the bank levy and problems caused by the crisis, Hungary's banking system is stable, as are the parents of foreign-owned banks, but its load-bearing capacity has limits, Janos Muller, the chief advisor for the Hungarian Banking Association, told MTI.

Muller was commenting on the sharp weakening of the forint in recent days, especially against the Swiss franc, a currency in which a large part of Hungarian banks' stock of retail loans is denominated.

The forint weakened as far as 273.43 to the Swiss franc overnight on Tuesday but had firmed back to 265.53 early Thursday.

Stress tests conducted by the National Bank of Hungary last October showed the country's banking system was resilient enough to withstand a strengthening of the Swiss franc to 245 forints at the end of 2011 and to 257 forints at the end of 2012.

Muller told MTI Hungary's banking system is "resistant to shocks" and that the assistance program for borrowers with foreign currency-denominated loans as well as moves by the US Fed and the ECB would calm markets. Although Hungary's banking system is strong and operating normally, the current situation calls attention to the fact that there are limits to what the system can bear, he added.