Hungary: let the banks pay
Central Europe News Briefs
In late September, the Hungarian parliament passed a controversial law allowing holders of Swiss franc denominated mortgages to repay their loans in their entirety at a 23.4% discounted exchange rate, with banks forced to swallow the losses.
The move strongly affects Austrian banks, with Erste Bank, Raffeisen and Bank Austria having a combined total of €5.4 billion in outstanding home loans in the country, mostly via their subsidiaries.
The Austrian government has reacted by prompting the European Commission to assess possible violations of EU law, while also exploring the possibility of a trade tribunal in line with Austria’s bilateral investment security agreement with Hungary.
Meanwhile, the mortgage law is likely to damage the Hungarian economy; as 80% of the financial sector is foreign owned, banks are set to reduce lending, increase interest rates, and divert their investments elsewhere, Erste Bank CEO Andreas Treichl told Die Presse in October.