(MTI) – Hungary’s 10 million citizens could lose far more than a few hundred thousand borrowers may gain thanks to the bank settlements law, Hungary’s Banking Association said on Thursday.
“Clients are now under the impression that they can win a lot more from current bailout,” Levente Kovacs, the association’s secretary general, said in a statement, arguing that the biggest reduction on loan repayments borrowers could hope for is around 25-30 percent, or around the same as they could have saved under a previous bailout based on an exchange-rate-capped repayment scheme.
Kovacs said the stock of non-performing loans had grown because many borrowers who had paid back forex loan installments on time before were now stalling their repayments in anticipation of the new law, Kovacs said.
On the issue of whether contracts had been fair or not, he argued the banking sector was one of Hungary’s most strictly regulated areas, and banks had laid down their operational charters and defined the range of their financial products and services in compliance with the regulatory framework, while the authorities had continually monitored them.
The bank settlements law imposes demands on banks with retroactive effect, he said. These demands could not have been fulfilled since they had not existed at the time of the introduction of their products, he said, adding this raises constitutional issues.
Government spokeswoman Eva Kurucz said in a statement that the government was committed to holding to account banks that pursued unfair lending practices and brought hundreds of thousands of Hungarian families to the brink of bankruptcy. The cabinet has decided on the law and this will go to a vote in parliament on Sept. 24, she added.