Taking on the bankesters ? How long before we " discover " Hungary's Prime Minister using sarin on foreign banks ?
http://www.reuters.com/article/2013/09/06/hungary-fxloans-orban-idUSL6N0H20FB20130906
http://www.reuters.com/article/2013/09/06/hungary-fxloans-orban-idUSL6N0H20FB20130906
* PM Orban says banks should modify fx loan contracts voluntarily by Nov
* Government will "eliminate" forex loan contracts otherwise
* Govt will avoid measure that could undermine banking system -analyst
* Bank Association says hopes talks with government will continue
By Krisztina Than
BUDAPEST, Sept 6 (Reuters) - Hungary's prime minister, seeking re-election next year, warned the country's banks on Friday that the government would "eliminate" foreign currency mortgages unless banks helped borrowers deal with their losses.
The loans, totalling over 11 billion euros, have become a major burden for households after repayments surged in the wake of the 2008 financial crisis. Viktor Orban's government has now raised the stakes for the country's mostly foreign-owned banks after weeks of talks.
The prime minister said the banks should modify the contracts and bear most of the losses resulting from exchange rate swings on the mortgages, mostly denominated in Swiss francs, by November or else the government would act.
Orban did not specify what he would do, but his Fidesz party said on Thursday the government could convert the loans into forints unless the banks' fulfilled their "moral obligation".
"If the government has to resolve this situation ... it will apply a solution that eliminates foreign currency loans," Orban told public radio, saying the banks had been wrong to make borrowers bear all the risks.
Orban's government has previously imposed taxes on banks to fill budget gaps and made them swallow losses totalling about 1 billion euros on a previous loan relief scheme in 2011.
While Orban wants banks to foot most of the bill, he will likely avoid measures that could undermine the banking system, especially as Hungary faces the risk of capital withdrawals if the U.S. central bank starts reducing its supply of cheap money.
"Looking at what the government is doing - building up state-owned banks - they may keep foreign-owned banks' profitability permanently low but avoid their immediate exit which would raise stability concerns," said Eszter Gargyan, an analyst at Citigroup.
Orban has said he wanted to see Hungarian ownership of over 50 percent in the banking sector and the state earlier this year gained a majority stake in savings banks.
Foreign banks whose Hungarian units may be hit by a new mortgage relief scheme include Austria's Raiffeisen and Erste, Germany's Bayerische Landesbank and Italy's Intesa Sanpaolo.
The Bank Association, which has been in talks with the Economy Ministry about the loans, said the statements from Fidesz and the prime minister came as a surprise, but they hoped negotiations would continue.
Raiffeisen, Erste and Bayerische declined to comment.
BIG VULNERABILITY
More losses for the banks would be the latest in a raft of policy moves by Orban which have seen him lump telecoms and energy companies with a bigger share of the costs of cutting Hungary's budget deficit - to cries of protest from big business, the European Union and some foreign governments.
Resolving the problem of forex loans, which have been a drag on consumption and a big vulnerability if the forint weakened, is another leg of Orban's bid for financial sovereignty after Budapest repaid an earlier IMF loan last month.
Such moves come as Orban gears up for next year's election. Although his Fidesz party is firmly ahead of the opposition in polls, close to half of voters are undecided.
His call could please disgruntled borrowers who staged a small demonstration in Budapest on Friday.
A group of 40-50 people protested, putting stickers on banks' doors saying: "They robbed us, they will rot in jail."
One of them, Magdi Toth, 46, took out a Swiss franc mortgage in 2006 and her repayments have since more than doubled, which her family could not pay and they have lost their home.
"We had to leave our home and now we live in a flat on which my brother has a mortgage so if he cannot pay his loan either, our next step leads into the street," Toth said.
Orban also said the relief scheme should be fair, and those who borrowed in foreign currenciescould not be better off than those who took out mortgages in forints.
Uncertainty over the forex loan plans has weighed on the forint in past weeks.
"It is clear that they will make the banking system finance the solution anyway. The main question is whether this will be a one-off shock or there will be time," a trader in Budapest said.
CENTRAL BANK PLAN
While the government has been negotiating with banks, the National Bank of Hungary, led by Orban's close ally Governor Gyorgy Matolcsy, has also made a proposal of its own.
This would lead to a gradual and full conversion of the loans into forints by forgiving part of principal payments on foreign currency mortgages and extending an earlier scheme that allows monthly repayments below the market rate.
Even though the central bank is not part of talks, Matolcsy has the ear of Orban, and as economy minister had been the architect of earlier unconventional economic policies.
Some analysts said the final outcome may be similar to the central bank's proposal.
"The central bank's proposal would be a good option from a stability perspective," said Citigroup's Gargyan.
"In this case the conversion would not be a one-off, but would be spread over time."
The economy ministry has not responded to Reuters questions about the central bank plan.
http://www.bloomberg.com/news/2013-09-03/forint-weakens-to-4-month-low-on-loan-concern-budapest-mover.html
Forint Weakens to 4-Month Low on Loan Concern: Budapest Mover
By Andras Gergely - Sep 3, 2013 10:21 AM ET
The forint dropped to a four-month low after Magyar Nemzet reported a leader of the ruling Fidesz party as saying banks must bear most of the cost of phasing out foreign-currency loans.
Hungary’s currency depreciated 0.7 percent to 302.28 per euro by 3:46 p.m. in Budapest, the weakest on a closing basis since April 26. Yields on the government’s benchmark 10-year bonds rose six basis points, or 0.06 percentage point, to 6.66 percent.
The state and borrowers will share the burden, albeit to a much smaller degree, the newspaper reported today, citing an interview with Antal Rogan, Fidesz’s parliamentary group leader. An immediate conversion of foreign-currency loans would cost banks about 950 billion forint ($4.2 billion), Sandor Csanyi, chief executive officer of OTP Bank Nyrt., said in an ATV interview late yesterday.
“The key local factor in Hungary is the uncertainty over the foreign-currency borrowers’ rescue package, which is having an impact on the forint,” Pal Saaghy, a Budapest-based currency trader at broker Equilor Befektetesi Zrt., said by phone today. “Rogan’s comment showed the burden is increasingly shifting toward the banks.”
Shares in OTP fell 0.9 percent to 4,270 forint, extending the decline to 15 percent since July 16 when the government said it wants to eliminate foreign-currency mortgages. The forint depreciated 3.1 percent against the common European currency in the same period.
Final Plan
The government will finalize the relief plans for borrowers by the end of December, Janos Lazar, the prime minister’s chief of staff, told news website Vasarhely24.
While OTP would survive any type of relief plan, an immediate currency conversion for loans may have “fatal” consequences for the wider economy, Csanyi said.
“Csanyi threw in a rather large number for the losses in case of total forint conversion, which probably increased the risks for the forint,” Equilor’s Saaghy said.
http://www.xpatloop.com/news/74211
Discussions On The Suspension Of EU Funding For Hungary To Resume In September |
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Minister of State in charge of the Prime Minister's Office, who also heads the National Development Agency as a Government Commissioner, will meet European Commissioner for Regional Policy Johannes Hahn again in September - Minister of State in charge of European Affairs Enikő Győri responded at a press conference held after a meeting of the State Secretaries for European Affairs of the Visegrád Group countries on August 26, 2013. She added that experts of both the European Commission and Hungary are working to prevent the loss of these funds.
Speaking at the press conference, Enikő Győri stated that efforts have to be made to come to an agreement with the European Commission, because if they waited for the European Court to resolve the issue, the country could lose the funds in question by the time a final ruling is made. The current EU multiannual financial framework, which began in 2007, is to end this year, and this was why the Commission decided to “tidy up the house” with respect to projects in process, so the decision on the suspension of the funding was not unexpected.
Polish State Secretary for European Affairs Piotr Serafin declared that it could happen to any member state that payment of their EU funds is suspended, and that the cooperation of the V4 countries – Poland, the Czech Republic, Slovakia and Hungary – was also important when it came to transposing legal regulations on cohesion policy.
Peter Javorcik, State Secretary for European Affairs of Slovakia, also emphasised that the suspension of funds also occurs from time to time with older member states, and there was nothing surprising in this.
Vojtech Belling, State Secretary for European Affairs of the Czech Republic, said that the four Visegrád countries were struggling with the same problems with respect to the distribution of EU funds. The EU suspended some operative programs in the Czech Republic last year and a long series of discussions were needed at the time to develop an action plan for re-launching them.
Enikő Győri explained that the State Secretaries meeting in Balatonfüred organised within the framework of the Hungarian V4 Presidency discussed the most important issues of the Lithuanian EU Presidency, in which regional cooperation could play an important role.
They also discussed their positions on the agreement regarding the coordinated development of transport infrastructure between the V4 countries adopted during the Polish Presidency and on the EU Climate Protection Agreement, which is currently under development. The State Secretaries for European Affairs of the Visegrád Group countries met in Balatonfüred in preparation for the two-day meeting of the EU General Affairs Council that is to convene in Vilnius on Thursday.
Source: Ministry of Foreign Affairs
Speaking at the press conference, Enikő Győri stated that efforts have to be made to come to an agreement with the European Commission, because if they waited for the European Court to resolve the issue, the country could lose the funds in question by the time a final ruling is made. The current EU multiannual financial framework, which began in 2007, is to end this year, and this was why the Commission decided to “tidy up the house” with respect to projects in process, so the decision on the suspension of the funding was not unexpected.
Polish State Secretary for European Affairs Piotr Serafin declared that it could happen to any member state that payment of their EU funds is suspended, and that the cooperation of the V4 countries – Poland, the Czech Republic, Slovakia and Hungary – was also important when it came to transposing legal regulations on cohesion policy.
Peter Javorcik, State Secretary for European Affairs of Slovakia, also emphasised that the suspension of funds also occurs from time to time with older member states, and there was nothing surprising in this.
Vojtech Belling, State Secretary for European Affairs of the Czech Republic, said that the four Visegrád countries were struggling with the same problems with respect to the distribution of EU funds. The EU suspended some operative programs in the Czech Republic last year and a long series of discussions were needed at the time to develop an action plan for re-launching them.
Enikő Győri explained that the State Secretaries meeting in Balatonfüred organised within the framework of the Hungarian V4 Presidency discussed the most important issues of the Lithuanian EU Presidency, in which regional cooperation could play an important role.
They also discussed their positions on the agreement regarding the coordinated development of transport infrastructure between the V4 countries adopted during the Polish Presidency and on the EU Climate Protection Agreement, which is currently under development. The State Secretaries for European Affairs of the Visegrád Group countries met in Balatonfüred in preparation for the two-day meeting of the EU General Affairs Council that is to convene in Vilnius on Thursday.
Source: Ministry of Foreign Affairs
Morning Fred, the football game was a bit lopsided but at least it ended at a decent time.
ReplyDeleteVery amusing how the second "Chemical attack" was pulled, they are probably editing the footage to show that Hungary was behind it :) Can't have those bankers taking losses.
I'm unable to make any predictions on whether we attack Syria or not, O waffling like a preschool girl, the Saudis bribing "officials" left and right, evidence admitted to being less reliable and Russia/China making some waves. The smart move would be to give up on it but our leaders are corrupt, sneaky, dishonest, immoral and great liars, not necessarily very smart though. (McCain's smile :))
Fukushima may make it all Kabuki (sp) theater though.
Credit bubble bulletin is a good one this week
http://www.prudentbear.com/2013/09/difficult-decisions-ahead.html#more
Morning Kev - glad to hear your Friday Night Lights didn't drag out to late !
ReplyDeletePM Orban better watch his step - he's going to be blamed for global warming , Hungary will definitely be found to have aided Iran and Syria , he will be alleged to be anti-semitic and he's probably responsible for US Non Farm numbers missing expectations - he should avoid hot tubs , small planes and jogging or driving his car late at night !
US foreign policy on turned into a carnival of trial balloons - will we go limited kinetic action route or the route of changing battlefield to favor Rebels , several days worth of missile strikes / bombing or a sixty to ninety day air war campaign , military action or the latest trial balloon of a sternly worded 45 day ultimatum , does Obama have the votes in Congress or not ( fill he respect a congressional non vote or not ) , what happens if the Senate votes yes and the House no ( or what happens if the House doesn't schedule a vote at all ) ? Many questions , who knows is the answer or answers .... the Pols just seem to be making their stances up as they go along !
Fukushima is getting worse by the day - and no comment at the G-20 about the Japan debacle ? Shows what a joke the G-20 is !
McCain expression on getting schooled , just the look of horro as he was wondering who let this woman in here ( look of horror similar to expression on Yanks Manager Joe Giradi when calling in Joba Chamberlain or Phil Hughes these days .....