BBJ’s stories of the week, September 7-13
It’s Friday, another ending of a news cycle – and so, before BBJ takes off for the weekend, it’s one look back at the bigger stories we followed this week.
• The biggest story? How about three major deals signed with interests from China, that mammoth macroeconomy of the future, on various levels? Right, so locally perhaps these machinations weren’t the most attention-grabbing in Hungary-centric headlines these week (anyone paying a modicum of attention will know what that was – again – more on this later), but a combined €37.3 billion in deals plus a promise that “All [Hauwei] products destined for Europe will be made in Hungary by 2015 or will pass through the Biatorbágy logistics hub” is nothing to sneeze at.
Whether or not Foreign Affairs Minister Péter Szijjártó and his lot are ever truly able to make good on previously announced plans to have one-third of all Hungarian exports going to non-EU nations by 2018 and increase exports to Easterly regions reach at least 50% to €110 billion by 2020 remains to be seen, but clearly it’s full speed ahead for the Eastward-facing strategy.
Further evidence: Szijjártó’s start to negotiations on a $50 million credit deal with Uzbekistan closing the workweek.
• Hungarian football got some publicity this week – and not all of it of the hooligan-centered bad variety, either. Just prior to an emphatic 5-1 World Cup qualifying match win by the national team, OTP Bank CEO/Hungarian Soccer Federation (MLSz) president Sándor Csanyi announced that his association would be submitting a bid to host games in the 2020 UEFA European Football Championship tournament and in connection, Prime Minister Viktor Orbán promised an upgrade of Ferenc Puskas Stadium in Budapest to take place before 2016.
Unfortunately, the optimism couldn’t last long – this is Hungarian soccer, after all. The Democratic Union of Hungarians in Romania (UDMR) this week readied a formal complaint with governing body FIFA due to “widespread anti-Hungarian sentiment” to which fans were submitted during a World Cup qualifying match in Bucharest; before said match, Hungarian fans were arrested and at least seven people injured.
Team Hungary’s next World Cup qualifying match sees the squad travel to Tallinn to play Estonia on October 11.
• News of the battle between Hungary-based gas-and-oil giant MOL and the Croatian government over the ownership of Croatia-based INA had publicly calmed until this week – just before the actual negotiations of September 18 regarding the company: MOL threatened to sue for some €264 million for an alleged breach of contract stemming from 2009.
According to Croatia-based daily newspaper Jutarnji List, the threat was hardly a surprise, though, as both parties have reportedly recently been in contact with US-based legal firms.
In fact, such a move may indicate that the aforementioned negotiations are already leaning in MOL’s favor after admissions by a pair of high-ranking Croatian politicos – including the deputy prime minister and a minister to be involved in the upcoming negotiations – that the Hungary company has a legitimate grievance that must be taken seriously.
• The public airing of problems some in the banking industry have had with the National Bank of Hungary (MNB)’s “Funding For Growth” scheme, i.e. its too-short lending period and reach, has apparently done its job: MNB governor György Matolcsy announced mid-week the extension of the program through December 2014 along with the addition of a massive HUF 2 trillion to the already-extant/previously-issued HUF 750 billion in available refinancing.
• Of course, the opening speech at the autumn 2013 session of parliament by Prime Minister Viktor Orbán including comments on the already hot-button issue of forex-based loan bailout plans set the tone for the week’s most interest-drawing storyline.
One more go-around, then for the oftenest-quoted bit from Orbán: “The banks abused their own position and [exploited] the people’s naïveté. They were propagating [forex-based] loans while they were aware of the potential risks. They knew exactly what would happen if exchange rates went haywire, they [played down] the risks to customers in advance, [and] they made a deal that meant a huge profit only for them.
“It is a moral obligation of the banks to modify the [loan] contracts. We are calling on the banks to bear most of the losses stemming from the exchange rate changes themselves. If they do not comply voluntarily by November 1, the government will take steps [to do so].”
Banking interests then spent much of the week responding to the comments; we’ll just link to a short roundup here, drawing attention to perhaps the most extreme of opinions, namely Hungarian Banking Association chairman Mihály Patai’s assessment that converting forex-based loans will cause serious damage to the forint in the immediate short term. Further actual development in this storyline is certain as the challenging November 1 deadline draws closer…
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