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Banks say financial market regulator bill needs more work

Hungarian banks want to see the country's financial market regulators given a greater number of more efficient tools with which to prevent crisis than those outlined in a bill submitted to Parliament by the Finance Ministry, Hungarian Bank Association head Rezső Nyers told MTI.

The bill submitted by the Finance Ministry on Friday needs to be fleshed out, Nyers said. The bill outlines the sequence of steps to be taken by the regulator if a bank of macro-economic importance threatens to go under. It would give financial market regulator PSzÁF the power to limit ownership rights of troubled banks if owners fail to cooperate in taking measures deemed necessary, and even transfer them to a special state credit institution established for just such a purpose.

The ministry drew up the bill based on recommendations by the IMF, which is leading a €20 billion financial support package Hungary was granted after its bond market locked up in the autumn of 2008 and its banking system, which relied heavily on foreign currency to finance lending, was put at risk. The bill was submitted to Parliament with just two sessions left in the current government cycle, making it highly unlikely it will be approved before the next government is formed.

Nyers said the association had raised objections, both technical and concerning the content of the bill, during consultations with the Finance Ministry before it was submitted to Parliament.

The bill does not achieve its goal in several areas, perhaps because it was hastily drawn up, he added. (MTI – Econews)