FX loans could be converted into forints this fall

Issues

The government is expected to decide this fall on the issue of converting foreign currency denominated loans into forints, National Economy Minister Mihály Varga said in an interview on public television yesterday evening.

Referring to the decision of the Hungarian Supreme Court (Curia), which said that banks have to compensate borrowers who were charged for foreign exchange fluctuations, Varga said the Court’s decision also applies to vehicle loans. However car loans do not necessarily have to be converted into forints, he added.

Hungarians have an outstanding 150,000 Swiss franc and euro denominated vehicle loans, with a total outstanding loan stock of HUF 162 bln.

The law paving the way for compensating customers holding FX-loans was adopted on July 4 by the Hungarian parliament. It states that the practice of banks charging currency spread was illegitimate, and that such charges have to be repaid to debtors. It also says that one-sided contract modifications are void. The minister referred to the legislation as being “just the first round of measures” affecting borrowers and said the conversion into forints could take place in October or November.

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