Hungary’s government should consider cutting the outstanding principal on FX mortgages, central bank Vice President Balog said in a report. The proposal would expand to the principal of the loans a plan in which the government and banks split the interest payments of FX loans on the share above 180 forint per franc, according to the report. “This wouldn’t be a one-time, immediate FX conversion of the outstanding debt but the gradual yet complete conversion into forint and elimination of the exchange-rate risk,” Balog said. /Erste has EUR 2 bln. CHF based loans to Hungarian private individuals. We estimate the total fx loss could reach 660 mln. EUR, the one-third could be borne by Erste (220 mln. EUR pre- tax, or roughly 27% of 2012 income before tax).