The cost to banks of the settlements law, once passed, is expected to be higher than estimates, analysts have told state news agency MTI. Banks are likely to be HUF 1 trillion worse off after paying compensation to borrowers, as opposed to of HUF 600-900 billion, ING Bank’s senior analyst András Balatoni said. Domestic consumption will be boosted by forex borrowers whose instalments will be reduced, but banks in the short run will not be in a position to support growth, Balatoni said. He added that lending activities could further shrink. Gergely Gabler, senior analyst for Erste Bank, said the total burden on the sector would be “somewhat more” than expected, but he noted that the exact amount would depend on a complex methodology to be defined by the central bank. Gabler said the capital position and lending capacity of banks would be impacted. A moratorium on banks raising interest rates until April 2016 was an unexpected component, he said, adding that if existing forex loans are converted to forint-based ones at a rate more favourable than the market rate, this could further weaken the forint.