Hungarian banks will hardly come out in 2011 before the financial tunnel, which fell after the outbreak of the financial crisis last year, shows an analysis of the international rating agency Standard and Poors, BTA forward.
Financial situation of Hungarian banks will deteriorate because of economic recession in the country, depreciation and volatility of the national currency, the forint, and the pressure on the allocation of funding.
Agency predicts a decline in gross domestic product (GDP) of the country by nearly 6 percent in 2009 and 1 percent in 2010 due to the significant reduction of domestic demand, imports and exports, and smaller cuts in government spending.
Hungarian government for its part expects a decline of 6,7 per cent this year.
This is coupled multiply the risks of insolvency for failure to return the loans in foreign currency, which will affect profits and liquidity of banks by 2011.
In April the same rating agency lowered its rating on four major banks operating in Hungary, after having reduced the country’s credit rating because of uncertainty about the economic recession.
The long-term credit rating on Hungary, as calculated by Standard and Poors, is now slightly above speculative grade.
Hungary was the first country of the European Union, which has requested assistance from international financial institutions to avoid bankruptcy. She received a „life preserver“ of 20 billion euros, more than half of them from the International Monetary Fund (IMF) provided to implement draconian measures of savings.