The average installment of foreign currency debtors decreased by 20%
October 16, 2019
After the settlement and conversion, the average installment of an average foreign currency-denominated customer decreased by 20 percent, said András Becsei, vice president of the Hungarian Banking Association and CEO of Good Finance Mortgage Bank in a press conference in Budapest on Wednesday.
According to the Vice-President, one third of the bank’s capital stock is the burden of settlement on the Hungarian banking sector. The statutory process at European level is unprecedented and its effect is that every Hungarian citizen has received 100,000 forints, he added.
According to expert analysis
He highlighted that, according to expert analysis, clients who entered the exchange barrier were the best at clearing.
In his opinion, the vast majority, 82% of average foreign currency lenders, pay smaller installments.
Levente Kovács, Secretary General of the Banking Association, explained that from 2010 to now the banking sector has paid a special tax (bank tax, contribution and financial transaction tax) of HUF 1438 billion, which if banks had used to lend to the SME sector, this could have resulted in a 1.2 percent annual GDP growth.
The secretary general said that during the settlement, about HUF 1 billion will be written for clients, of which about HUF 750 billion will be refunded to foreign currency borrowers and about HUF 250 billion will fall to HUF borrowers in the fall. In addition, for the banking sector, the whole process requires the involvement of about 25,000 employees, the use of hundreds of experts dedicated to this task and tens of billions of forints, says Levente Kovács.
András Becsei divided the participants in the settlement into five groups, the first being the average clients who did not enter the exchange rate barrier, who could post a 20-25 percent reduction in installments.
Without the forint conversion
Their new installment would be 50 percent higher for them.
The second round is for clients who have entered into the exchange rate barrier, and in this case it is important to note that the January exchange rate was set at 180 HUF / franc, and for them the repayment remains until the end of the exchange rate barrier. The benefit to these customers is that the debts of the collective account have been extinguished by almost everyone – emphasized András Becsei. (The MNB quoted Swiss franc at 294.63 forints on Wednesday.)
In the case of interest-only clients, for whom the grace period is expiring recently, the repayment installment has increased because they have already had to start paying off their capital – they can provide one percent of foreign currency debtors.
The other one per cent includes customers who are indebted to the Japanese yen and have a preferential interest rate loan that does not give the minimum 1 per cent interest rate premium that is set by law when converting to a new forint loan. These clients may increase interest rates, but they are entitled to continue to cancel their debt in foreign currency, and they can notify their bank within 30 days.
The association’s vice president listed a fourth significant group of non-paying customers, who were first used to write-offs to reduce late arrears.
Many of them were completely relieved of past arrears
Those who still have their debts have, on the one hand, significantly reduced their debts, and other non-bank solutions can provide them with additional help.
András Becsei explained that, for example, the Hungarian Banking Association is in favor of raising the quota of the National Asset Manager and discussing the regulation and introduction of private bankruptcy.
One-third of defaulting debtors should definitely go to the asset manager, while the next third, who already have a decent income, will be able to go to a private bankruptcy, and the association hopes that one-third will return to regular repayment.
According to the Vice-President, the fifth group of debtors are consumer creditors (personal and car loans). In their case, the law did not require forint conversion, and the settlement is favorable because it protects the client from the adverse effects of the exchange rate hike.