Hungary to Force Banks to Foot Franc Mortgage Losses, Irking Austria

Discussion in 'Wall St. News' started by ASusilovic, Sep 21, 2011.

  1. Hungary is set to force lenders to swallow currency losses on Swiss franc mortgages. Financial stocks and the forint fell as the country’s banks and the Austrian government criticized the plan.

    Hungary wants to allow fixing the Swiss franc at more than 20 percent below market rates for early repayment, Prime Minister Viktor Orban said today in parliament. Austria “firmly rejects” the measure, which may cause “enormous losses” to banks and risks regional financial stability, Finance Minister Maria Fekter said today. Erste Group Bank AG (EBS) and Raiffeisen Bank International AG (RBI) dropped, while Hungary’s risk rose.

    “It tells foreign banks that they can go to hell, which in the long run is extremely negative,” Daniel Bebesy, who helps oversee $1.5 billion mostly in Hungarian government bonds at Budapest Investment Management, said in a telephone interview.

    Ouch! That´s a low kick into the stomach of Austria´s and other foreign banks.