The current picture of the banking sector can be completely reorganized by converting foreign currency loans into forint. One of the biggest losers could be OTP, the favorite stock market company of Hungarian retail investors. However, many small banks, and of course the entire savings sector, can benefit from attracting thousands of customers from the big ones. What can the domestic banking sector look like after the conversion?
According to Márton Nagy central bank director, the banking sector may have a completely different picture after the conversion of foreign currency loans into forint. He thinks that more can go away, some can merge. Only 5-6 bigger ones can stay on the market, instead of the current many small ones. Organizations can be more cost-effective and more easily bear the pressure that the government has not relieved for nearly four years now.
Forint conversion is coming
A larger bank with a large portfolio of foreign currency loans can make a very difficult decision. If forint conversion is market based, as stated by Martin the Great, they will have to offer their clients cheap forint loans, replacing foreign currency loans. Market-based forint conversion means that every financial institution can redeem any foreign currency loan. So banks need to go into price competition if they don’t want to lose customers. Similarly to Hungarian, at the discounted rate redemption frenzy introduced at the end of 2011, if you do not like what our own bank offers, you can apply for cheaper forint loans at other banks – the question is how much competition and average forint loans will get. One thing is for sure: BankRáció.hu also processes these special loan redemption loans, we help you find the best deal .
Smaller banks are doing well
Smaller financial institutions that do not have a large portfolio of foreign currency loans and even have adequate capital can start out first. Home savings can also come in, as bridging loans allow these institutions to compete if the loan to be replaced is for home. The savings sector, which has undergone a transformation, may also be in a position to recover.
Larger banks can decide between bad and worse
OTP is one of the best capitalized domestic banks. This may even give the financial institution a chance to further expand its size by, in theory, attracting more customers from other banks. However, the problem is that the others will not be idle. At least they will want to keep their own paying customers. It is therefore foreseeable that competition will not start between the larger banks.
The picture from the customer side can also be sad. Privileged credit institutions may rush while distressed debtors will be forced to accept their own bank offer. But it is almost certain that good credit must be fought for. The capacity of small banks is not infinite. Clerks and accounts can be easily overloaded. So it is worth starting the administration as soon as possible.
We do not think that it is in any way worth stopping the repayment of our foreign currency loan due to the settlement of foreign currency loans and the much-anticipated repayment installment. For existing loans, it does not matter whether we get the money back and how much, we have to repay it on a monthly basis (in technical terms: contractually), as these are live contracts. If we do not pay the installments for 3 months, we may even be put on the negative UYT (formerly known as the YTU) list (that is, no bank will give us credit) and may terminate our current loan agreement. This is not protected by government action, and the more banks perceive the expected forint conversion as not paying properly (we are quasi-unreliable debtors), the less they will fight for us with low interest rates. Customers are advised to start selecting the right bank and redeeming their loans as soon as possible on our site . With a good credit, you can save up to hundreds of thousands over the remaining term.
Most foreign currency lenders are not good debtors
And the transformation of the banking sector will largely depend on these processes. That is, how many customers can be sucked out by small banks and savings. How much does this launch the competition between the major banks. The proportion of foreign currency debtors is bad debtors, so they are not creditworthy. These questions may determine how much the foreign currency loan settlement will redraw the picture of the banking sector. If there are indeed more people leaving the market, it will certainly not be to the benefit of the customers, as there will certainly be no more competitive market with fewer players.