Bloomberg News

OTP Caps Biggest Weekly Fall in 6 Months on IMF: Budapest Mover

April 13, 2012

OTP Bank Nyrt. (OTP), Hungary’s largest lender, capped the biggest weekly drop in more than six months on concern disputes obstructing Hungary’s bailout bid will grow and that the government will introduce a new banking tax.

The shares weakened 6.1 percent to 3,375. forint by the close in Budapest, extending its weekly decline to 10 percent, the most since the five days through Sep. 23. European stocks fell, with the Stoxx Europe 600 Index headed for the longest streak of weekly losses since August as China’s growth slowed more than forecast.

Hungary would consider it an act of “blackmail” if the International Monetary Fund were to pose political criteria for starting financial assistance talks and is ready to go to court to defend its position, Prime Minister Viktor Orban said in an interview on public radio MR1-Kossuth. The government may introduce a levy on financial transactions from 2013 as it shifts the tax burden from labor to consumption, Orban added.

“The news on the deal between the government and the IMF, the government’s communication and the idea of the new transaction tax are the fundamentals” behind OTP’s slump, Peter Varju, a Budapest-based trader at Erste Group Bank AG, said by telephone today.

Hungary turned to the IMF for financial assistance in November and has yet to begin official talks. The European Union has blocked the start of negotiations because of a legal dispute over laws affecting the central bank, the judiciary and data protection.

“The dispute seems to be getting inflamed again, the start of formal talks is getting delayed, and that may put the Hungarian market under pressure in the coming days or weeks,” Zoltan Arokszallasi, a Budapest-based analyst at Erste, wrote in a research report today, adding that international sentiment was becoming “more negative.”

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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