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Demján to Orbán: Savings cooperative law must change

National Association of Savings Cooperatives (OTSz) Chairman Sándor Demján told Prime Minister Viktor Orbán in a letter on Monday that the law on integration of savings cooperatives must be amended to ensure that OTSz will maintain its majority stake in Takarékbank, the primary bank in the savings-cooperative sector.

Demján told the prime minister that the law needed to be modified in order to ensure that OTSz will have the right to subscribe shares to regain savings cooperatives’ current majority stake in Takarékbank. OTSz’ share subscription in Takarékbank should be at nominal value, similar to the capital increase to be carried out by state-owned Magyar Posta under the approved law, Demján said. The capital raise by Magyar Posta and other regulations in the law would reduce savings cooperatives stake in Takarékbank to a minority. OTSz currently holds about 5% in Takarekbank and savings cooperatives hold 55%. The remaining shares, making up about 39%, are held by Hungarian Development Bank. 

Demján also requested that the law be changed in order to give savings cooperatives the right and the means – in the form of ten-year subordinated loan capital – to purchase shares if the state decides to sell its stake in the bank. The savings cooperatives should have the same special rights on their new preference voting shares to be subscribed in Takarékbank under the law as they had on their old preference voting shares, the OTSz chairman said. Finally, the OTSz chairman told the prime minister that the law needed to be amended in order to ensure savings cooperatives majority representation on the management and supervisory boards of the new “Integration Organization.”

Demján announced after parliament approved an amended version of the law on integration of savings cooperatives on July 5 that the OTSz would initiate all means of appeal against the law, both in Hungary and in European forums. He had written a first letter to Orbán, asking for consultation and changes in the bill which was submitted to Parliament on June 25 and passed on June 27. This was sent back to Parliament for reconsideration by President Áder on July 3.

Responding to Demján's first letter, Orbán wrote on July 5 that the law on integration of the savings cooperative was compatible with earlier acknowledgements that the sector requires broad restructuring in which the state plays a bigger role.