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What The Soaring Swiss Franc Means For Hungarian And Polish Mortgages
Spoiler alert: nothing good, because what until yesterday was, indicatively, a 1 million mortgage (in HUF or PLN terms) is suddenly a 1.2 million mortgage. But what about the details?
Here they are, courtesy of Goldman Sachs.
Poland. Total balance of SFr denominated mortgage loans in Poland stood at PLN131 bn at the end of November which corresponds to 22% and 15% of retail and total lending respectively, and some 8% of Polish GDP. The individual exposures of banks under our coverage differ significantly with MBK, PKO having >20% of Swiss franc loans while the balances of PEO and BHW amount to <5%. SFr lending remains a legacy product, the balance of which has been declining over the recent years (-22% since 2009) and is expected to fall further. Implications from strong depreciation of PLN vs. SFr predominantly relate to the risks of asset quality and to a lesser extent capital and liquidity. Strong performance of SFr denominated exposures over the last 5 years (2009-14) that came against 28% depreciation of PLN vs. SFr is largely attributable to the fact that mortgage installments remained stable because of declining LIBOR rates. In a press release published today (January 15), the KNF disclosed that according to their stress test, the depreciation of PLN by 30% to circa 4.5 level should not have meaningful and systemic implications for the sector (CET1 - 20bp to 13.3%), while a 50% move (towards 5.1 level) could see banks’ CET1 ratios come under moderate pressure (CET1 -100bp to 12.5%). We cut our earnings estimates for Polish banks by 3% in 2015 and -3% in 2016 to better reflect weaker asset quality and topline trends; we modestly lower our CET1 forecasts.
Hungary. Total balance of SFr denominated loans in Hungary stood at HUF3.9 tr at the end of November, which corresponds to 26% of total lending and, similar to Poland, is largely FX retail lending. Importantly, the high nominal exposure is only temporary given that Hungarian authorities have already started a process of conversion of retail FX lending into HUF. The conversion rates were set in early November (CHF256; €309) and selected banks (OTP, ERST, RBI) have indicated that they have subsequently obtained necessary € and SFr liquidity. The conversion of FX mortgage loans is expected to come into effect as of February 1, 2015. Based on current information we do not expect a meaningful direct impact from the recent FX move.
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A "soaring dollar" will also mean the same thing for anyone or any of our trade partners with dollar denominated loans.
Dumb.
One of my first,and most painful business lessons, buying in one currency and selling in
another.Currency hedges were not common then, and capial controls made it even more painful.
Always 'match' your liabilities to income in the same medium.
+1 which is the whole reason why small and medium businesses generally operate more inside the same currency zone
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re the article, note the Squid, there:
"Importantly, the high nominal exposure is only temporary given that Hungarian authorities have already started a process of conversion of retail FX lending into HUF. The conversion rates were set in early November (CHF256; €309) and selected banks (OTP, ERST, RBI) have indicated that they have subsequently obtained necessary € and SFr liquidity. The conversion of FX mortgage loans is expected to come into effect as of February 1, 2015. Based on current information we do not expect a meaningful direct impact from the recent FX move. "
Your statement and your avatar are reflective of someone who supports the euro? Youre trolling right?
he is German what did you expect lol
Okay, i think this means i´m gonna buy me another nice holiday house in western hungary for cheap.
If things keep going this way, you better get used to the idea of staying in Germany, or wherever you are from, because the age of free movement of capital, goods and people is going to be over along with the easy immigration and resettlement policies.
Should have taken the loan from Russia instead. See Europe? This is what happens when you look West instead of East.
Not German. I think he might be a Swedish speaking Finn.
Ghordy is a Mexican national. I know this for a fact.
lol, and my real name is Speedy Gonzales. But I'm a (very) continental european, thank you very much. with a very long pedigree, like many dogs and cats
Een Lëtzebuerger?
Do you have one of those small steering wheels in your car so you can drive with handcuffs on?
ah now I know what medium giraffe does for living , border patrol
It was the sexy outfit that swung it for me. And the shiny badge. They gave me a gun, too, but I'm not allowed to have any ammunition. :(
Nah,
Swahili bushman or possibly eskimo.
What difference does it make?
We're all subject to the fucking moneychangers until we start putting heads on pikes.
Goldman advised a few Greek banks to issue mortgages on Swiss franc ... about 70.000 mortgage loans in greece it seems so far are on swiss francs.... yeah well, whats new?
But the small scale cross border businesses does not, we cannot. I buy produce in an unspecific African currency, fly the goods it in USD and sell in EUR and GBP. I have learned long time ago, to just adjust to every situation that happens since we are all in the same boat, trying to figure out the future is impossible most of the time. My competitors cost structure changes also, same as mine. Everything is relative.
Agree. But rest assured that many, many have not learned your lesson and are up the creek right now.
There is no free lunch.
Counterparty risk? Wait what? Didn't central banks and their puppet governments outlaw such things along with gravity?
Yes, what seems even dumber is the flight to "safety" that I see. Quick, this fiat is dangerous, let's run to that other fiat...
stupid.
Consequences.
Stupid should hurt.
I, for one, welcome your new Swiss landlords!
"Stupid should hurt." -- Yes it should, unfortunately, that has not been the case for quite some time now.
Remind us, how many of Tim Geithner's "arsonists" are bankrupt and in prison?
As the old cliché goes, "Two moral hazards don't make a free market."
Ding, Ding, Ding! We have a winner! I will use that line going forward...brilliant.
Dumb and Dumber...
An oldie but a goodie - the Raiffeisen Hungary Subprime Commercial (which was largely CHF denominated - either at the consumer or institutional level)
And for those who think the pre-peg CHF days were somehow "better" or reflected more "honesty" or "fairness" in f/x rates - to prevent a financial meltdown in Eastern Europe which would have bankrupted either the ECB or several EU member states - the SNB sold CHF at a discount to select central and commercial banks, so the fuckers who signed up for those liar loans denominated in CHF wouldn't stop the muzac at the Draghi/Juncker dance...
Did you get your free CHF? - No, then you must not be a member of the club, or be indebted to one. The good old days weren't really so good. But the SNB must have seen some serious shit in proximity to a large fan to admit their actions were unsustainable...
Yes LOP that is the bigger areana by far
Lots of firework displays this year
ouch - should have taken a jpy mortgage instead
No need to wait for Reggie Middleton's next posting (he promised one on contagion).
Here lies contagion. Those loans described above will hit Swiss investors. Oh, the pot is beginning to boil.
Meh, old Yeller can buy them. She can just monetize them when she starts monetizing shale debt.
Printing money- the Swiss Army Knife of solutions. If you pardon the pun.
I really have no sympathy for anyone dumb enough to leave themselves exposed to the banks. If you can't afford something, don't buy it. Forward Debt Serfs!
+1,000,000,000,000,000
Not that I'm saying it's good, but if people keep paying their mortgages wouldn't that make the GDP rise there?
What we REALLY need is a global government to keep us all safe.
and one currency would lead them out of the darkness....
the squid's concern for the poor poles and hungarians is touching
"Based on current information we do not expect a meaningful direct impact from the recent FX move."
In other words "we DO expect an impact".
Fuckers.
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CMC Markets says suffered losses from Swiss FX move, but not material Read more at:CMC Markets says Swiss franc-related losses were not material
CMC Markets says it 'sustained some losses' from Swiss franc volatility Thursday
http://economictimes.indiatimes.com/articleshow/45912517.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst CMC Markets says suffered losses from Swiss FX move, but not material Read more at:
http://economictimes.indiatimes.com/articleshow/45912517.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
"Hi. I live in poland and took out a home loan in swiss francs! Don't make any polack jokes, though, because they may just ring too true."
a "Polish Mortgage" - that's kinda funny.
Germany and Russia are the Swiss' collection agencies.
A polish guy goes to see an optometrist and the optometrist points to the vision chart on the wall and says "Can you read the third line from the bottom?" The polish guy responds "Sure! I know all the guys on that list!"
Sorry, I didn't get it..
Because the eye chart lines read like polish names?
Who needs atomic bombs to destroy the world when you can do it with debt and computers.
We can't begin to appreciate the implications of this yet - we'll probably look back in awe at what we are chuckling about today. The effect of liquidity drain created by this situation is a total unknown and could trigger a deriv. implosion which would change all of our lives dramatically. Let's hope not (but that shoe has to drop one day). The rebalancing alone will make for some very interesting moves in the coming days and weeks.
Agreed.
gold is the currency of kings
silver is the currency of gentry
copper is the currency of peasants
debt is the currency of slaves.
Wasn't copper meant to be "barter", or did I simply not get your point?
... perhaps Soros can help ... he's hungarian ... :)
hung arian?
How 'bout dem (freedom) apples?
In other news, I'm pretty sure Yellowstone Nat'l Park is getting ready to Blow!
are you fucking kidding me?
The Polish will be lining up to beat the Ukrainians and be drafted first!
Lights out in Poland. This is game over! Finished. Kapputt!
WHAT THE FUCK WAS SNB SMOKING??????
Apparently, it doesn't mean that much to Hungary.
http://www.bloomberg.com/news/2015-01-16/hungary-s-orban-makes-world-s-b...