Austrian banks unfazed by Hungarian PM comments

VIENNA, March 13 Wed Mar 13, 2013 10:32am EDT

Related Topics

VIENNA, March 13 (Reuters) - Big Austrian banks on Wednesday played down Hungarian Prime Minister Viktor Orban's call to reduce foreign lenders' dominance of the domestic financial sector, saying they wanted to see first what concrete steps may emerge.

Orban, whose unorthodox policies have often riled investors and fellow European Union members, said on Tuesday his government would set up a system of state-owned banking and help small companies switch foreign-currency loans into forint loans.

He suggested it would push to slash the 90 percent share of the sector owned by foreign lenders, which include Austria's Erste and Raiffeisen, Belgium's KBC and Italy's Intesa Sanpaolo and UniCredit.

That could bode ill for lenders already saddled with a special Hungarian levy on banks and forced to take losses on foreign-currency mortgages that Hungary let borrowers repay at below-market rates.

Orban "has often mentioned in the past that he would like to have a higher domestic ownership share in the banking sector but never specified how that should happen, just like this time," said a spokeswoman for Vienna-based Erste Group Bank.

She said Erste wanted to see what steps the Hungarian parliament passed before commenting on Orban's suggestion of letting companies swap loans into forints, and reiterated Erste was committed to the neighbouring country.

"We are the number two bank on the Hungarian market and wish to continue to focus on the banking business," she said.

Erste had 6.2 billion euros ($8.1 billion) in loans in Hungary at end-2012, 5 percent of its total, of which 29 percent were in forints, 49 percent in Swiss francs and 21 percent in euros. It lost 55 million euros in Hungary last year.

Raiffeisen Bank International had 5.43 billion euros in loans and advances to customers in Hungary at the end of the third quarter - 6 percent of its total - of which 62 percent were in foreign currency.

A spokeswoman for Raiffeisen Bank International took a similar line on Orban's remarks.

"Prime Minister Orban made similar comments in July 2012 and to date we are not aware of any concrete plans. We therefore do not want to comment in detail," she said.

UniCredit's Bank Austria, emerging Europe's biggest lender, declined to comment.

The Austrian government prefers quiet diplomacy over sharp public criticism of Hungary, and one government source said talks continued on both the political and expert level about the banking sector and other issues.

One senior banker did not want to comment on Orban's latest remarks, but added: "The fact they have a new central bank governor doesn't make things any easier."

He was referring to Orban's appointment this month of former Economy Minister Gyorgy Matolcsy as governor of the central bank, a move some investors worry could prompt new, unconventional policy tools to stimulate the economy.

($1 = 0.7680 euros) (Reporting by Michael Shields; Editing by David Cowell)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.