James Woolf of Flow East in Prague has taken issue with the Financial Times’ editorial on Hungary’s treatment of the country’s banking sector. The truth is that Hungary has alienated many of the banks active there with what they claim are heavy-handed measures to compensate consumers who borrowed in Swiss franc to finance their homes. The government claims the banks misled their clients, but in his letter to the editor, Woolf basically says the banks should have known better.
Sir, With reference to “Beware Hungary’s cure for Swiss franc mortgage hangover” (Inside Business, January 29): it is not often that one can find agreement with the policies of Hungary. In the case of a deliberate mismatch of income and liability by allowing foreign currency loans to be (mis)sold by banks, it is clearly not a “tricky problem for regulators and banks”. No sane investor would have unhedged currency exposure of their main asset and income against their main liability. The expectation should be financial ruin. Any bank that promotes such a structure is clearly mis-selling and should expect nothing less than a reset of the exchange rate, fines and criminal liability.