Orban: Govt to buy Erste stake, reduce bank levy
Budapest, February 9 (MTI) – The Hungarian state and the European Bank for Reconstruction and Development (EBRD) will acquire a stake in Erste Bank Hungary, Prime Minister Viktor Orban announced on Monday, after signing an agreement with leaders of the banks.
Orban also said that the government will “significantly” reduce the sectoral tax on banks in 2016-17, with further reductions to follow in 2018. He said that in 2016 the special tax would be reduced by a total 60 billion forints (EUR 195m). The rate of the tax, as well as calculation of the tax base would also change, the prime minister added.
The bank levy, introduced as a “crisis tax” in 2010, generated revenue of a little more than the 144 billion forint target last year. This year, the target is the same.
Orban said that the tax will be reduced by a lesser degree in 2017 and under the agreement, the government will continue its efforts to bring it “closer to the level that is generally applied in Europe”. After the first two years of reductions, however, Hungary’s bank tax will still be the highest, just ahead of Slovakia’s, he added.
Economy Minister Mihaly Varga “was making calculations for long weeks” to conclude that the Hungarian economy’s load-bearing capacity and growth potential would enable the budget to “tolerate” the lower bank tax and also fulfil the Maastricht criteria, Orban said.
The prime minister added that in 2010 Hungary had to find the way out of the European financial crisis under difficult conditions and at that time few shared its position about the right method for crisis management.
When the bank tax was imposed, Hungary asked the players of the banking sector to help the country bear the consequences of the financial crisis, Orban said. The banks that operated in Hungary at the time understood this and acted in a fair way, keeping to the regulations even if they disagreed with them, he added.
Monday’s agreement shows that “time has come when we can attempt to open a new chapter in our cooperation with the European banking sector,” Orban said. Erste will also become a Hungarian bank which the government hopes will not only maintain but also consolidate its positions with the increased funding envisaged in this agreement, he said.
Meanwhile, Erste Group CEO Andreas Treichl said that the state of Hungary and EBRD have each been offered 15 percent stakes in Erste Group’s Hungarian business, under the agreement signed on Monday.
Treichl said it was still not clear whether the stakes would be purchased or acquired through capital injections.
Orban said the size of the stake the state would acquire would depend on due diligence, but would be similar in scale to that acquired by the EBRD, “on condition that we see eye to eye in terms of the price” and other details.
The memorandum of understanding (MoU) under which Hungary committed to reducing the bank levy has been signed by Orban, Treichl and EBRD President Suma Chakrabarti.
“[The signing of the MoU] is a recognition by the Hungarian Government that with steps taken to address the foreign currency loan issue and the economy showing signs of a sustained recovery, the time has come to gradually reduce the tax burden on the banking sector in order to provide a stable environment and to improve the business climate in the sector for it to support more lending and thus economic growth,” Erste Group said.
In the agreement, the Hungarian government said it “does not intend to take direct or indirect majority ownership stakes in systemically important local banks […] and is committed to transferring all direct and indirect majority equity stakes it currently holds in local banks to the private sector within the next three years”, Erste Group said, quoting the MoU.
The MoU provides for the substantial reduction of the bank levy in 2016-2019 and addresses the challenge of non-performing loans in ways which are in line with international best practice, Erste Group said.
Hungary also commits to “refrain from implementing new laws or measures that may have a negative impact on the profitability of the banking sector” and to ensure “fair competition between, and equal treatment of, all financial institutions active on the market” in the country, Erste Group said, quoting the MoU.
With a view to stepping up its support for the Hungarian economy, Erste Bank Hungary will be introducing several programmes over a period of three years, according to Erste Group’s statement. These are a 250 million euro loan disbursement programme, including a complete financial package for public sector employees, a 100 million euro lending package for and energy efficiency programme, and a 200 million euro loan facility to primary agricultural producers, the statement said.
Photo: MTI
Source: http://mtva.hu/hu/hungary-matters
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