Bloomberg News

OTP Falls to 3-Month Low on Hungary Tax Report: Budapest Mover

April 11, 2012

OTP Bank Nyrt. (OTP), Hungary’s largest lender, fell to the lowest close in almost three months after the news website Origo reported that Hungary plans to introduce a financial transaction tax from next year.

The shares dropped 1.9 percent to 3,600 forint by the close in Budapest, the lowest since Jan. 18. The government may collect as much 200 billion forint ($880 million) from the tax, which would apply to bank transfers and payments, Origo said.

“There aren’t too many international precedents for this, especially in an immature financial culture such as Hungary’s,” Levente Blaho and Adam Keszeg, analysts at Raiffeisen Bank International AG (RBI), wrote in a research report.

Since winning power in 2010, Prime Minister Viktor Orban’s government has relied on extraordinary taxes on the energy, banking, retail and telecommunication industries to plug budget holes. The Cabinet, which is trying to obtain aid from the International Monetary Fund and the European Union, has pledged to end the levies after this year with the exception of the financial industry, where they will fall by 50 percent.

Economy Minister Gyorgy Matolcsy wrote in an article in the weekly newspaper Heti Valasz last week that some type of financial transaction tax should be introduced.

Foldhitel es Jelzalogbank Nyrt., the Hungarian mortgage lender known as FHB, dropped 1.5 percent to 544 forint, the lowest since March 7.

“There is also a strong probability that clients will move their savings to institutions which are exempt from such tax obligations,” Akos Kuti, a Budapest-based analyst at broker Equilor Befektetesi Zrt., and colleagues wrote in a research report today.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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