BUDAPEST, Feb 6 (Reuters) - Hungary’s central bank may push banks into borrowing through longer-term securities to match financing portfolios more closely to the home loans they are funding, a report on business website portfolio.hu said on Friday without naming its sources.
A central bank spokesman declined comment.
The report said that from mid-2016 at least 30 percent of all home loans would have to be financed by mortgage bonds or other mortgage-backed securities, curbing the risks of maturity mismatches among banks that tend to borrow via cheaper, shorter-term securities.
Prime Minister Viktor Orban’s government and Hungary’s courts have made sweeping changes to the heavily taxed sector in recent months including making banks return about 3 billion euros ($3.4 billion) to borrowers for cost hikes deemed unfair.
Banks would either have to form their own mortgage units or have 30 percent of their mortgage loans refinanced by a mortgage bank, the report said, estimating the total additional issuance needed at up to 1 trillion forints ($3.7 billion).
The changes could put OTP Bank, FHB Bank and UniCredit at an advantage over their peers as these lenders already have mortgage units, the report said.
It also noted that commercial banks would face substantial additional costs when launching their own mortgage units as longer-term financing is more expensive.
The report also said the central bank was considering other forms of financing, such as covered bonds or mortgage-backed securities, which could allow commercial banks to secure longer-term financing directly and more cheaply. (Reporting by Gergely Szakacs; Editing by Louise Ireland)