Hungary's biggest banks oppose early loan repayment scheme.

By bne IntelliNews November 16, 2011
Eight of the biggest Hungarian banks have urged the European Commission to take measures to stop the implementation of the early loan repayment scheme introduced by the Hungarian government, reported citing a letter of the banks to the institution. The banks noted that the plan that allows borrowers to make repayments on their outstanding FX loans at exchange rates below the market levels, puts additional pressure on the banking sector in an already challenging market. The appeal was signed by UniCredit, Raiffeisen Bank International, Raiffeisen Zentralbank, Erste Group, Volksbanken, BayernLB, Intesa Sanpaolo and KBC. Last week, Austria required that the European Commission to review the repayment scheme's correspondence to key EU policies and laws, stating it intervenes in valid private contracts. In mid-September, the European Commission said in a preliminary opinion that the scheme puts the banks in a more disadvantageous position, as lenders will have to cover the full cost of the discount exchange rate repayment. A final official position, however, has not been announced yet.

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