In a statement released on Tuesday, the ECB has criticized Hungary for not consulting it before passing legislation forcing banks to compensate their clients who took out foreign currency loans. The ECB insists this is a breach of Hungary’s treaty obligations and wrote that it would “appreciate” a more cooperative approach in future. The statement did not let the country off the hook, now that the law has been passed. “The adoption of the law in no way relieves the authorities of their duty to consider this opinion.” The ECB warns in its statement that the impact of the measures could have a severe impact on banks operating in Hungary.
“While the banking sector’s current capital position is stronger than before the implementation of the early repayment scheme, the potentially significant costs of the new measures may in some cases require material capital injections from the owners of the financial institutions,” writes the ECB.
