Bloomberg News

OTP Falls Most in Month Bank Tax Made Permanent: Budapest Mover

November 19, 2012

OTP Bank Nyrt. (OTP), Hungary’s largest lender, fell the most in a month after the government said a special bank tax will be permanent, breaking a pledge to phase it out.

The shares dropped 2.8 percent to 4,000 forint by the end of trade in Budapest, the biggest plunge on a closing basis since Oct. 18. FHB Jelzalogbank Nyrt. (FHB), a Hungarian mortgage lender, declined 1.1 percent to 450 forint. The benchmark BUX stock index, where OTP has a 30 percent weighting and FHB has 0.8 percent, retreated 0.4 percent.

The tax will stay “permanently,” the Economy Ministry said late Nov. 16. The levy is part of a set of measures, including higher duties on energy and utility companies, aimed at keeping the budget deficit within the European Union’s limit of 3 percent of gross domestic product.

“This latest move could force further deleveraging of Hungary’s banking sector,” Marta Czajkowska-Baldyga, a Warsaw- based analyst at KBC Groep NV (KBC), wrote in a research report today. “We expect the news to have a negative trading impact.”

Economy Minister Gyorgy Matolcsy backtracked a month ago on a promise to halve the bank levy from 2013, pledging instead to cut it the following year at a meeting with Bavarian Finance Minister Markus Soeder.

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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