May 19, 2020 / 10:16 AM / 16 days ago

Third of Hungary retail loans at risk of virus fallout -cbanker

BUDAPEST, May 19 (Reuters) - Around a third of Hungarian retail loans are vulnerable to the economic fallout of the coronavirus pandemic, central bank Director Adam Banai told a banking conference organised by financial news website portfolio.hu on Tuesday.

Hungary started lifting coronavirus restrictions in Budapest from Monday, although residents returning to shops or travelling on public transport will have to wear face masks.

A phased reopening is Prime Minister Viktor Orban’s strategy to head off deeper and more lasting harm to the economy, which is expected to shrink by about 4% this year, a Reuters survey showed.

Banai told the conference that within the 35% of retail loans deemed at risk, 8% was considered to be directly vulnerable as these borrowers were employed in the worst-hit tourism and restaurant sectors.

Hungary’s unemployment rate rose to 3.7% in the first quarter as 56,000 people lost their jobs based on official statistics.

In the eight weeks since Hungary declared a crisis situation because of the pandemic, retail loan issuance fell by a tenth, Banai said, according to a summary of his remarks published online.

He said banks expected only about 30% of borrowers to opt out of a loan repayment moratorium imposed by Prime Minister Viktor Orban’s government, which suspends loan repayments for both households and companies through the end of this year.

Major banks in Hungary include OTP Bank, Austrian Erste Group Bank and Raiffeisen, Belgian KBC , Italian UniCredit and Intesa SanPaolo . (Reporting by Gergely Szakacs; editing by Barbara Lewis)

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