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Erste Bank CEO critical of Hungarian banking tax

Erste Bank agrees with the idea that the financial sector must contribute to the management of the budgetary problems and the government debt, though believes that this should be done in a uniform way within the European Union, the Austrian Erste Group's president and CEO Andreas Treichl told MTI. Hungary seems to have decided to follow a separate path.

“This does not make us very happy,” Treichl said, speaking to MTI in Budapest on Wednesday.

Treichl said it could tip off the balance among member states if problems are handled differently by each member of the EU.

The Erste group president-CEO noted that Hungary is one of the few countries where the financial sector did not need to be supported from public funds during the crisis. And now the Hungarian government wants to introduce the highest banking tax in Europe, he said.

“It is hard to understand the logic behind the planned measure and it is hard to accept it,” Treichl said.

Treichl added that it would be impossible to pass the tax on to clients as a bank depends on clients' positions improving, therefore, if the banking tax is introduced in its current form, the burden will have to be largely carried by the bank.

Answering a question as to whether Erste has asked the IMF for assistance in connection with the planned Hungarian banking tax, Mr Treichl said one of the Hungarian government's arguments for the tax is that the IMF and the EU are forcing Hungary to make extraordinary efforts in order to meet its deficit target, however, "if the IMF provides other options", that would affect the need for the introduction of such a high tax.

Treichl said such a significant tax burden takes major funds from the banks and, if it is introduced in its current form, some banks will not be able to make the tax payment from their earnings. These will need their parent banks to use funds from the Czech Republic or Slovakia to pay the banking tax in Hungary.

"I hope that the Hungarian government and the IMF will reach an agreement and this will not be necessary," Treichl said.

Representatives of the IMF and the EU are holding talks in Hungary as part of a regular review under Hungary's 2008 autumn standby agreement.

The Erste Group operates in eight countries of the CEE region. (MTI-ECONEWS)