Hungary’s economics minister Gabor Orban admits that the government’s insistence that banks compensate their clients for charges imposed on their foreign loan clients will force some of them to seek capital hikes. In an interview with Reuters he said the compensation would cost the banks roughly €4bn and that the government would seek to have foreign currency mortgage loans and home equity loans converted into forints. This would likely involve between €9bn and €10bn in loans, once the compensation has been paid. The government believes the result of these measures will be renewed consumer confidence and spending, however critics warn they risk destabilizing the country’s financial sector.
