BRUSSELS (MNI) – Hungary’s plan to oblige banks that offered
mortgages denominated in Swiss francs to accept lump-sum repayments at a
below-market exchange rate could hurt the country’s banking system and
economy and face obstacles under EU law, the European Commission warned
on Tuesday.
The plan could have a “serious negative impact on the Hungarian
banking system” and also have “negative repercussions on the Hungarian
economy” said a spokesman for EU Economic and Monetary Affairs
Commissioner Olli Rehn.
Commission officials will also “study whether there are problems
with the move regarding EU law, for instance regarding the free movement
of capital and state aid,” the spokesman said.
Hungarian Prime Minister Viktor Orban has vowed to press ahead with
a law that would allow Hungarians who can afford to do so to close their
Swiss franc-denominated mortgages in a single payment using an exchange
rate of just 180 florints to the Swiss franc, compared to the current
market rate of about 234. The foreign exchange loss would fall on the
banks that issued the loans, many of which are Austrian.
The move has been prompted by the sharp rise in the value of the
franc which has hit many Hungarians with mortgages in the currency,
commonly used in Hungary and many other Central European countries.
Vienna has attacked the plan and called on the European Commission
to seek a temporary injunction at the Luxembourg-based European Court of
Justice.
–Brussels newsroom +32495228374 pkoh@marketnews.com
[TOPICS: M$X$$$,MGX$$$,M$$CR$,M$$FX$]
