* OTP chief Csanyi is close to PM Orban, drinks wine with
* He persuaded Orban to dilute a previous raid on banks
* But now he has sold a big chunk of his OTP shares
* Investors see it as sign gov't to inflict new pain on
By Marton Dunai
BUDAPEST, July 22 Sandor Csanyi, chief executive
of Hungary's OTP bank, is one of a select group of people who
know what Prime Minister Viktor Orban is thinking, which is why
markets flinched last week when the banker dumped 36 million
euros' worth of his firm's shares.
The two men have shared bottles of wine together in private
meetings, they have sat together in VIP boxes watching Orban's
favourite soccer team, and, when Orban wanted to impose a
swingeing tax on banks three years ago, Csanyi persuaded him to
water it down, according to people who know them.
Csanyi last week sold off a large chunk of his shares in OTP
Bank, where he has been chief executive for 21 years,
shortly after Orban's government announced plans for a new
policy that could cost the banks vast sums of money.
The message picked up on the Budapest stock market was that
if someone with the prime minister's ear was dumping shares, the
outlook must be very bad indeed, possibly even worse than anyone
Shares in OTP have fallen 12.5 percent since Thursday, while
banks further afield are potentially exposed, too. Austria's
Raiffeisen, Germany's Bayerische Landesbank
and Italy's Intesa Sanpaolo are among the big foreign
banks with units in Hungary.
"A leading banker who holds a stake in his bank rarely goes
to the streets to protest," Tamas Koranyi, editor-in-chief of
Hungary's leading business daily Napi Gazdasag, wrote on Monday.
"He can resign, or, if he can't - perhaps out of loyalty to
the other stockholders - he sells. A market economy can hardly
need a stronger signal."
Csanyi himself has been silent on his reasons for selling.
His company said he wanted to use the capital to re-invest in
agricultural businesses he also owns.
The sale emerged 48 hours after Orban's government announced
it would make banks change the terms of the contracts under
which many Hungarians have taken out foreign currency mortgages
that have become more onerous due to currency fluctuations.
The government has not disclosed details of the plan. It is
likely to help borrowers - an important constituency when Orban
seeks re-election next year - at the expense of the banks.
Csanyi's access to Orban is particularly noteworthy because
the Hungarian prime minister's inner circle is so tiny.
Csanyi used his influence to powerful effect in 2010 when
Orban wanted to impose a "crisis tax" on banks that was so high
that people in the sector believed it would drive them under.
The OTP chief had daily contact with Orban while the plan
was being considered, according to someone familiar with the
exchanges, who spoke on condition of anonymity.
In the final version, the tax was still high, but it had
been watered down, sources involved in the discussions said.
Csanyi persuaded Orban, who rarely changes his mind, to lower it
and spread it across all financial firms, not just banks.
"(Orban is) very single-minded," said a diplomat. "He
wouldn't let anybody's opinion get in the way."
This year, signs emerged of tension between Csanyi and
Orban's chief of staff, Janos Lazar, gave two interviews in
which he said Csanyi had excessive influence, and likened him to
an octopus whose tentacles spread over all aspects of life.
"In a democracy, that amount of economic power poses a
serious risk," Lazar told the news website 444.hu last month.
If there was already a rift, Csanyi's decision to sell off
his shares last week has probably widened it.
Over the weekend, the online edition of Magyar Nemzet, a
paper close to Orban's Fidesz party, reported that the OTP chief
was considering resigning due to ill health, and that this was
why he sold off some stock.
This was contradicted by OTP's chief press officer, Bence
Gaspar, who said Csanyi was in good health, would not resign and
had sold the shares to raise cash for his agri-businesses.
Several people close to the OTP chief gave Reuters a
detailed account on the state of Csanyi's health, on condition
of anonymity because they were not authorised to speak to the
media on this subject.
They said Csanyi underwent planned open heart surgery in
February to fix a genetic defect in a part of the aorta and a
heart valve. After a five-week recuperation he received a clean
bill of health from his doctors, these people said, and was back
They said he has thought about resigning the CEO post and
remaining chairman in the future, but not any time soon.
The newspaper story may have been a ploy to undermine him,
said several observers, though they did not offer any evidence
that the government was in any way involved in the article.
"It's obvious that the government has aimed its guns at Mr.
Csanyi," a leading Hungarian banker said on condition of
A government spokeswoman declined to comment on the article,
as did Magyar Nemzet editors.