Economy
Hungary confirms intention to halve bank levy from 2014
(Adds confirmation by ministry, analyst comment)
Hungary has promised to cut a controversial bank levy by half from 2014, a German official said on Thursday. Hungary's Economy Ministry has confirmed the report.
Bank tax may be halved in 2014
The finance minister of the German regional state of Bavaria, Markus Söder, said on Thursday his Hungarian counterpart had committed to the tax reduction during a meeting in Vienna, which was also attended by the Austrian finance minister, Reuters reported.
Hungary's Economy Ministry confirmed to state newswire MTI that Economy Minister György Matolcsy signalled to his counterparts in Vienna on Thursday that the cabinet intends to halve the bank tax in 2014.
Hungary on Wednesday opted to increase taxes to avert European Union sanctions over its budget deficit, reopening policy differences with its international lenders and dimming prospects for a long-delayed financing deal.
The government's decision to maintain one of its flagship measures, Europe's highest bank tax, drew protests from bankers and sent shares in central Europe's biggest independent lender OTP sharply lower on Wednesday.
Austrian and Bavarian lenders are among the biggest foreign financial institutions active in Hungary.Economy Minister György Matolcsy has met in Vienna his Austrian counterpart Maria Fekter and Markus Söder, the ministry said in an email.
The subject of their discussion was to draw the ties of the three countries closer and determine the directions of their future co-operation, it added.
Rather different reading of comments from the same man
UniCredit Bank Austria AG, a subsidiary of Italy’s UniCredit SpA, will remain active in Hungary, the bank's Chief Executive Willibald Cernko said on Thursday.
"It makes sense to remain in this country, our neighbor," Dow Jones cited Cernko as telling journalists on the side of a trade show, adding "we believe in this country. It is a temporary stress situation."
Cernko repeated earlier comments that his bank was one of only three banks that made a profit in Hungary last year.
The Hungarian government had earlier pledged to halve the tax in 2013 but then said Wednesday it would keep the tax at its present level in 2013.
Reuters also hear Cernko speaking but found very different quotes important, citing Cernko as saying that he was let down by Hungary's latest policy twist.
"I find it disappointing because especially at times like these, with all the difficulties we all have ... what we need is dependability," Cernko told journalists, saying government, banks and companies had to work together to boost confidence.
"If agreements are scrapped then I have to say it is very, very regrettable. It is not just a question of whether it is legal, it is also a matter of ethics," he said.
More disappointing comments were cited by Bloomberg. Timothy Ash, economist at Standard Bank in London, cited the news agency as reporting that Cernko said Hungary does not provide security for investors and that the country’s ownership rules cast doubt on the EU’s Nobel Prize.
“Pretty remarkable comments from the chairman of a big Austrian bank - goes on to argue that foreign investors are not protected in Hungary. Seems almost that open warfare has broken out between the country's foreign banks, and the government, after the government went back of the pledge to cut the financial sector tax, and is now planning to double the financial transactions tax - the head of the banking association is also threatening to resign in protest," Ash said.
“Orbán thinks he holds the foreign banks captive, but the reality is that they are voting with their feet - deleveraging out of Hungary as quickly as they possibly can. This is obviously going to be bad for growth," he added.
Hungary has promised to cut a controversial bank levy by half from 2014, a German official said on Thursday. Hungary's Economy Ministry has confirmed the report.
Bank tax may be halved in 2014
The finance minister of the German regional state of Bavaria, Markus Söder, said on Thursday his Hungarian counterpart had committed to the tax reduction during a meeting in Vienna, which was also attended by the Austrian finance minister, Reuters reported.
Hungary's Economy Ministry confirmed to state newswire MTI that Economy Minister György Matolcsy signalled to his counterparts in Vienna on Thursday that the cabinet intends to halve the bank tax in 2014.
Hungary on Wednesday opted to increase taxes to avert European Union sanctions over its budget deficit, reopening policy differences with its international lenders and dimming prospects for a long-delayed financing deal.
The government's decision to maintain one of its flagship measures, Europe's highest bank tax, drew protests from bankers and sent shares in central Europe's biggest independent lender OTP sharply lower on Wednesday.
Austrian and Bavarian lenders are among the biggest foreign financial institutions active in Hungary.Economy Minister György Matolcsy has met in Vienna his Austrian counterpart Maria Fekter and Markus Söder, the ministry said in an email.
The subject of their discussion was to draw the ties of the three countries closer and determine the directions of their future co-operation, it added.
Rather different reading of comments from the same man
UniCredit Bank Austria AG, a subsidiary of Italy’s UniCredit SpA, will remain active in Hungary, the bank's Chief Executive Willibald Cernko said on Thursday.
"It makes sense to remain in this country, our neighbor," Dow Jones cited Cernko as telling journalists on the side of a trade show, adding "we believe in this country. It is a temporary stress situation."
Cernko repeated earlier comments that his bank was one of only three banks that made a profit in Hungary last year.
The Hungarian government had earlier pledged to halve the tax in 2013 but then said Wednesday it would keep the tax at its present level in 2013.
Reuters also hear Cernko speaking but found very different quotes important, citing Cernko as saying that he was let down by Hungary's latest policy twist.
"I find it disappointing because especially at times like these, with all the difficulties we all have ... what we need is dependability," Cernko told journalists, saying government, banks and companies had to work together to boost confidence.
"If agreements are scrapped then I have to say it is very, very regrettable. It is not just a question of whether it is legal, it is also a matter of ethics," he said.
More disappointing comments were cited by Bloomberg. Timothy Ash, economist at Standard Bank in London, cited the news agency as reporting that Cernko said Hungary does not provide security for investors and that the country’s ownership rules cast doubt on the EU’s Nobel Prize.
“Pretty remarkable comments from the chairman of a big Austrian bank - goes on to argue that foreign investors are not protected in Hungary. Seems almost that open warfare has broken out between the country's foreign banks, and the government, after the government went back of the pledge to cut the financial sector tax, and is now planning to double the financial transactions tax - the head of the banking association is also threatening to resign in protest," Ash said.
“Orbán thinks he holds the foreign banks captive, but the reality is that they are voting with their feet - deleveraging out of Hungary as quickly as they possibly can. This is obviously going to be bad for growth," he added.
