Foreign currency loans -would go to court but makes provision for exchange rate correction
Good Finance Bank Zrt. Has decided to make a provision of HUF 20 billion to adjust the exchange rate gap on consumer foreign currency loans and wants to prove in court that its contract changes were fair, the bank said on the Budapest Stock Exchange website on Monday.
Good Finance is no longer the first bank to announce a provision
Goodbank Bank Zrt. Also announced on Monday that, due to the non-use of the exchange rate margin, a provision of HUF 5.1 billion was made in the first half of 2014 to cover settlement with clients. Good Credit announced in early July that, according to preliminary estimates, the Good Credit Group is expected to incur a repayment obligation of approximately $ 4.5 billion due to the non-use of the exchange rate margin, to which the group made a provision in the second quarter.
According to the Good Finance’s announcement on Monday, the bank will “make significant losses” under the Act on the Settlement of Certain Issues in the Court of Justice’s Resolution of July 4, 2014 on Consolidated Law on Consumer Loans in Financial Institutions.
Due to the statutory measures
Good Finance Bank Zrt. Will make a provision of HUF 20 billion in the first half of 2014 to adjust the exchange rate gap related to consumer foreign currency loans.
Good Finance Bank Zrt. Also stated that it would like to use the opportunity provided by law to prove in court that modifications to the terms of consumer credit agreements were fair.
The amount of potential customer compensation arising from the modification of the terms and conditions of retail loans is not known at the moment – adds the financial institution.
According to the communication
The Good Finance is examining all available redress mechanisms to demonstrate that its consumer credit agreement has always been fair and compliant with applicable law.
The statement mentions that a “law expected to be adopted in the second half of 2014” may incur additional costs related to the conversion of foreign currency loans into forint, but it is currently not possible to determine the amount.
Good Finance Bank remains a committed capital market player – stated in the announcement (MTI)