Hungarian lessors face a 15-20
percent decrease in business volumes in 2009 due to a battery of
new regulatory issues introduced by the country’s central bank and
other supervisory bodies.
Chief among these concerns is the
suspension of many foreign currency loans by Hungarian banks, as a
result of volatile exchange rates for these currencies against the
Hungarian Forint during 2008.
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According to Levai Gabor of the
Hungarian leasing association, the move will not affect all foreign
currency loans, but is intended to decrease the penetration of
Swiss franc and Japanese yen loans.
Hungary’s leasing market has seen
increasing numbers of these loans written over recent months, as
SME and consumer finance customers have favoured the lower interest
rates involved.
Last year some 90 percent of household
borrowing was conducted in euros and Swiss francs, and although
euro-based loans will not be affected by the suspension due to the
more stable exchange rate against the Forint, the loss of Swiss
franc borrowing will be a substantial blow to finance
providers.
Additionally, much car financing
credit has been denominated in Swiss francs during 2008, causing a
25-30 percent growth in monthly instalments during the two months
leading up to
1 December.
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By GlobalDataGabor predicts that the disappearance
of Swiss franc and yen-based financing, which has already happened
in many leasing companies, will greatly reduce the range of
financial products available to lessors in 2009.
Although the loss will be mitigated by
the retention of euro loans, the Hungarian leasing association has
recognised that along with increasing unemployment (an estimated 4
percent rise is predicted for 2009) and decreasing international
investment in Hungarian businesses, the change will hurt new
business volumes by up to 20 percent.
At the same time, Hungary’s Financial
Supervisor Authority will impose restrictions on car financing from
1 January 2009, to deal with increasing lending risks. If down
payments are less than 20 percent, or the maturity of contracts
exceed 96 months, says Gabor, such contracts will be defined as
high risk, stipulating raised capital requirements for lessors.
