Fitch sees a possibility for Austrian banks to consider a complete exit from Hungary depending on political developments in 2014 and associated costs for the banking sector, the rating agency said in a report on Austrian banks. The Austrian lenders have already significantly scaled down their operations in Hungary, thereby limiting their potential exposure.
Fitch believes that political risk regarding FX loans remains high in Hungary. The unorthodox policy measures such as government’s proposal to convert FX mortgages into forint mortgages at a pre-defined exchange rate or to shorten the maturity of mortgage loans could have a negative impact on the banking sector.
The Hungarian subsidiaries of Austrian banks are likely to remain loss-making in Q4 2013 and 2014. But Fitch believes that these subsidiaries are sufficiently small for the potential loss to be absorbed by adequate profitability elsewhere in CEE and in Austria.
At end-Q3 2013, Erste’s Hungarian loan book stood at EUR 4.6bn, Raiffeisen’s at EUR 5.2bn and Bank Austria’s at EUR 3.4bn.
Fitch expects both loan impairment charges and impaired loans to peak in Hungary in 2014.
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