VIENNA, June 26 (Reuters) - Austrian financial watchdog FMA is pushing banks to formally commit themselves to end foreign currency lending to Austrian retail clients in all but very exceptional cases, the FMA said on Friday.
Lending in foreign currencies, especially Swiss francs and Japanese yen was for many years a popular way to cheaply finance houses in Austria, but banks virtually stopped lending in francs last year.
This was driven mainly by the banks themselves, which faced a Swiss franc liquidity squeeze at the peak of the financial crisis following the collapse of Lehman Brothers.
The FMA now wants the banks to make a formal commitment not to make such loans, a spokesman for the regulator said. Exceptions would include loans to Western Austrians working in Switzerland with regular income in Swiss francs.
By March, Austrian private households had 36.7 billion euros ($51.1 billion) loans outstanding in foreign currencies, 1.1 billion euros less than at the end of 2008. This amounted to 31 percent of total private household borrowing.
Austrian and other banks have also lent in foreign currencies in emerging Europe, where they have stopped entirely lending in Swiss francs but still lend in euros, albeit more restrictively than before.
Foreign currency lending is particularly popular in Hungary, Romania, Poland and the Baltic states.
(Reporting by Boris Groendahl, editing by Will Waterman)
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