Bloomberg News

Hungary Corporate Lending May Dry Up as Capital Buffers Shrink

November 02, 2011

Nov. 2 (Bloomberg) -- Hungarian corporate lending may “dry up,” threatening the country’s economic growth, as banks’ capital buffers fall “sharply” and as lenders will book “substantial” losses on a loan repayment plan, the central bank said.

“The overall Hungarian banking system doesn’t need extra capital to meet the regulatory minimum, however, several local banks are moving dangerously close to running out of their capital buffers,” said Marton Nagy, director at the Magyar Nemzeti Bank, commenting on the Report on Financial Stability, published today.

Assuming a 30 percent participation rate in a foreign- currency mortgage repayment plan and a deepening of the euro area crisis, local banks may need 200 billion forint ($895 million) in extra capital, according to the report.

To contact the editor responsible for this story: Edith Balazs at ebalazs1@bloomberg.net


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