ADVERTISEMENT

Report: Erste could withdraw from deal with government

History

Wikimedia / Dragan Tatic / CAPTION: Andreas Treichl (holding the microphone) speaks at Panel discussion on " Europe before the crisis / post-crisis."

Erste Group Bank AG could withdraw from a deal to sell a stake in its Hungarian unit to the Hungarian state, a move that could “derail Hungarian Prime Minister Viktor Orbán’s bid to smooth ties with the banking industry and help lift the country’s credit rating to investment level,” Bloomberg Business reported on Friday.

Andreas Treichl (holding the microphone) speaks at a panel discussion entitled "Europe before the crisis / post-crisis" in 2013. (Photo: Wikimedia Commons/Dragan Tatic)

Speaking at a conference on Friday, Erste Chief Executive Officer Andreas Treichl said that policy makers are considering canceling an agreement the Hungarian government signed with the Austrian lender in February, under which it agreed that the extraordinary levy on the Hungarian banking sector would be decreased in exchange for increased lending by banks. The CEO said that unless a resolution is reached in the dispute to compensate clients of failed boutique brokerage Quaestor Zrt., Erste will cancel its offer to a sell 15% stake of its Hungarian unit to the government, Bloomberg Business reported.

Early in May, the CEO expressed hope that an amicable resolution could be reached in the dispute with the Hungarian government regarding compensation for failed brokerage Quaestor.

“We made it very clear to the government that if that case is not solved amicably between the government and the banks, there will be no participation,” Treichl said on Friday, according to Bloomberg Business.

According to Erste, the compensation of up to €100,000 for Quaster clients approved by the state in April, that would require banks to foot the bill, is in violation of the deal reached by the government and the European Bank for Reconstruction and Development. In this deal, the government promised to lower the bank levy, which is the highest in Europe, and ease other burdens lenders face in Hungary, Bloomberg Business reported.

Prime Minister Viktor Orbán and National Economy Minister Mihály Varga have stated numerous times in the past few months that the Hungarian government will decrease the bank levy in exchange for increased lending activity by banks operating in Hungary.

Early in June, Varga said that a tax benefit would be granted to banks that increased their lending activity.

The National Bank of Hungary (MNB) said in October that it was planning to push banks to increase lending within the corporate sector, especially to SMEs, as a condition for the reduction of the tax on the banking sector.

Hungary introduced the extraordinary bank levy as a temporary measure for three years in 2010, but it became permanent in 2013 and Varga said earlier that it would be maintained, but at a lower rate. The Hungarian government recently announced plans to gradually reduce the bank levy in the coming years. Next year, the levy is set to drop by HUF 60 bln.

ADVERTISEMENT

Average age of coronavirus patients declining Analysis

Average age of coronavirus patients declining

Parl't votes to phase out savings coops integration framewor... Parliament

Parl't votes to phase out savings coops integration framewor...

Roche Szolgáltató appoints P&C business partner lead Appointments

Roche Szolgáltató appoints P&C business partner lead

Budapest airport shuttle bus service expanded City

Budapest airport shuttle bus service expanded

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.