Back
15 Jan 2015
SNB’s decision might impact Hungary and Poland – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team views that the SNB’s decision to remove the its EUR/CHF floor might adversely affect Hungary and Poland as both the countries have a certain proportion of their mortgages in CHF.
Key Quotes
“The decision by the Swiss National Bank to remove the cap on EUR/CHF could have some negative impact on Hungary and Poland.“
“Although the country has gone a long way in restructuring its FX-denominated loans, there is still a lot of CHF-linked risk in the system. Hungarian banks have to convert around EUR8bln of FX-linked mortgages into forints, a large part of which is in francs. The conversion rate was set at CHF/HUF 256 (now around 315). The central bank will offer most of this amount from its foreign reserves (currently around EUR34 bln), so it depends on what share of its reserves is already in CHF.”
“By some estimates, Poland has around 15% of total loans in CHF, as well as over 35% of its mortgages.”
Key Quotes
“The decision by the Swiss National Bank to remove the cap on EUR/CHF could have some negative impact on Hungary and Poland.“
“Although the country has gone a long way in restructuring its FX-denominated loans, there is still a lot of CHF-linked risk in the system. Hungarian banks have to convert around EUR8bln of FX-linked mortgages into forints, a large part of which is in francs. The conversion rate was set at CHF/HUF 256 (now around 315). The central bank will offer most of this amount from its foreign reserves (currently around EUR34 bln), so it depends on what share of its reserves is already in CHF.”
“By some estimates, Poland has around 15% of total loans in CHF, as well as over 35% of its mortgages.”