Moody's: Hungarian banks on review for downgrade

Moody's Investors Service said it placed the stand-alone bank financial strength ratings of six Hungarian banks and the debt and deposit ratings of seven Hungarian banks on review for downgrade.

The banks are: OTP Bank NyRt, OTP Mortgage Bank, K&H Bank, Budapest Bank, FHB Mortgage Bank, Erste Bank Hungary and MKB Bank.

Moody's said the review for downgrade was prompted by the recently approved law, which gives foreign-currency mortgage borrowers the option to repay the full outstanding amount at exchange rates below market rates.

The review will assess the impact of the law on a bank-by-bank basis, taking into account: (a) the level of exposure to foreign-currency mortgages; (b) the take-up rate by borrowers; (c) the level of profitability; and (d) the capital buffers available.

Moody's said it anticipates that there are considerable differences between the rated banks with respect to these metrics.

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