BUDAPEST, April 24 Hungary's OTP Bank,
one of the main banking groups in central and eastern Europe,
could withstand the worst case scenario of losing all of its
investments in Ukraine and Russia, its chief executive Sandor
"Should we lose all our investments in Russia and Ukraine,
our core Tier 1 capital ratio would still remain above 12
percent," Csanyi told Bloomberg in an interview recorded on
Wednesday and published on Thursday.
"Even this unthinkable scenario would be unable to rattle
OTP, whose 2013 results were hit by Ukrainian and Russian
troubles, said in March an extreme negative scenario was only
likely to involve prolonged political instability, economic
contraction and a weakening Ukrainian hryvnia.
Csanyi told Bloomberg its Ukrainian bank would probably not
make a profit this year unless the crisis was resolved
positively, though its Russian unit should remain profitable.
In its home Hungarian market, where OTP Bank has faced some
of Europe's highest bank taxes and other punitive measures from
the centre-right government of Prime Minister Viktor Orban, more
measures were probably in the pipeline, he said.
"I would not be surprised if the government was considering
further measures that unilaterally affect banks," said Csanyi,
who has a close relationship with Orban. "However, their scale
will not be comparable to that of the early repayment (scheme)."
The early repayment scheme in 2011 allowed borrowers who had
taken out foreign currency denominated loans to repay them at a
preferential exchange rate to prevailing market rates, causing
banks a loss of more than 1 billion euros ($1.4 billion).
Csanyi said consolidation among Hungary's banks would
probably take longer than previously thought but would likely
result in 4-5 banks leaving the country in the medium term.
Central Bank Governor Gyorgy Matolcsy said last year he
expected four banks to leave Hungary within 18 months. All major
Hungarian banks have said they have no plans to leave the
country except MKB, a unit that Germany's BayernLB
must sell by the end of next year because of legal constraints.
($1 = 0.7231 Euros)
(Reporting by Marton Dunai; Editing by Mark Potter)