The MNB has held its first foreign currency spot tender relating to the forint conversion of foreign currency and foreign currency based mortgage loans. Commercial banks submitted tenders for the purchase of EUR 7.83 billion, out of which the sum of bids for the euro sale instrument conditional on the reduction in short-term external debt amounted to EUR 1.63 billion and that of bids submitted for the unconditional spot instrument combined with swap transactions amounted to EUR 6.2 billion. As before the tender the Magyar Nemzeti Bank had signed a formal agreement with all the banks disposing of a significant consumer foreign currency and foreign currency based mortgage loan portfolio on the participation in the tenders, the banks submitted their bids accordingly and thus the MNB accepted all tender bids.
At the end of September 2014, the stock of household foreign currency and foreign currency based mortgage loans in the banking system amounted to EUR 3,350 billion (EUR 10.8 billion), which can be reduced by more than HUF 500 billion (EUR 1.7 billion) after the settlement with consumers. This means that the forint conversion might affect a stock of EUR 9 billion. At the same time, the impairment of the credit stock accounted for amounted to more than EUR 156 billion (HUF 480 billion), out of which EUR 0.4-0.6 billion (HUF 120–180 billion) can be released due to the settlements, according to MNB calculations. The hedging need of banks relating to forint conversion can be estimated to EUR 8 billion.
The EUR 7.83 billion allocated in the MNB tenders means that the banks have covered the foreign currency loan portfolio subject to forint conversion almost entirely. Through the MNB’s tender the phasing-out of the household foreign currency and foreign currency based mortgage loans has become possible.
The MNB holds an additional tender at 10 am, on Monday, 11 November 2014 for satisfying the incidentally prevailing bank foreign currency need, at which banks can participate to the effect of the remaining limits available for them after today’s tender. In the future, the MNB will only hold a tender in the case of signalling individual bank needs.
MAGYAR NEMZETI BANK