<blockquote><a style="color:rgb(204,0,0)" href="http://www.bloomberg.com/news/2011-12-13/austrian-banks-facing-payback-as-hungary-s-debt-slaves-revolt.html" target="new"><b>Austrian Banks Facing Payback as Hungary’s $22 Billion Debt Slaves Revolt</b></a>, <a href="http://theautomaticearth.blogspot.com/2011/12/december-18-2011-2012-end-and-return-of.html">http://theautomaticearth.blogspot.com/2011/12/december-18-2011-2012-end-and-return-of.html</a><br>
<blockquote><i>When
Hungary’s former central bank governor was buying a house two months
before Lehman Brothers Holdings Inc. collapsed and the country sought an
emergency bailout, he received an offer he couldn’t refuse.<br><br>Peter
Akos Bod, now an economics professor at Corvinus University in
Budapest, was given a choice of mortgages by his bank. The 60 year-old
could select a loan in Hungary’s currency, the forint, at 13 percent
interest, or one in Swiss francs at less than 6 percent. After crunching
the numbers on a spreadsheet, he picked the cheaper franc loan. "It was
rational," he said of his 2008 decision in an interview in the
Hungarian capital. "I put it into a model."<br><br>Three years later,
Bod and about one million compatriots who took mortgages in francs are
faced with a debt pile that has swelled to 4.9 trillion forint ($22
billion). The currency’s 40 percent slump against the franc has raised
repayment costs, pushing mortgage arrears to a two-decade high and
prompting Prime Minister Viktor Orban’s government to brand the loans
"debt slavery."<br><br><b>To help homeowners, Orban imposed currency losses on banks</b> including Erste Group Bank AG and Raiffeisen Bank International AG (RBI) <b>that may total 900 million euros ($1.2 billion)</b>,
according to Cristina Marzea, an analyst at Barclays Capital. Faced
with the risk Orban would impose further measures, lenders have offered
to accept $2.2 billion of additional losses if the government promised
to take no further action. If it doesn’t, banks are threatening they may
withdraw from the country.<br><br><b>'Too Risky'</b><br>"Against the
backdrop of a potential western European financial crisis, this raises
the risk that western lenders will just pull out of Hungary because it’s
just too risky, which would be disastrous," Neil Shearing, senior
emerging markets analyst at Capital Economics Ltd. in London, said in an
interview. "Hungarian banks are incredibly dependent on their western
European parents for short-term credit lines. At the very least it means
credit is going to remain very tight."<br><br>Six of Hungary’s seven
biggest banks have foreign parents, including Italy’s Intesa Sanpaolo
SpA and UniCredit SpA (UCG) and Germany’s BayernLB. Only OTP Bank Nyrt.,
the country’s largest lender, is still domestically owned.<br><br><b>'Free of Debt'</b><br>Almost 18 months after Orban was elected in April 2010, <b>he
passed a law allowing Hungarians to repay mortgages denominated in
foreign currencies at discount of about 25 percent to today’s exchange
rate</b>. As long as a client applies before Dec. 31 and repays the
entire loan before Feb. 28, the banks have to make up the difference.<br><br>"I paid it back last week," Bod said. <b>"I’m free of debt slavery,"</b> said the former industry minister. <b>The
plan "is easy to explain from a political viewpoint. It’s cheap for the
government, expensive for the banks, good for voters."</b></i></blockquote></blockquote><br clear="all"><br>-- <br>P2P Foundation: <a href="http://p2pfoundation.net" target="_blank">http://p2pfoundation.net</a> - <a href="http://blog.p2pfoundation.net" target="_blank">http://blog.p2pfoundation.net</a> <br>
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