The banker who knows what's on Hungarian PM's mind

BUDAPEST (Reuters) - 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.

Hungary's OTP Bank Chief Executive Sandor Csanyi gestures during an interview in Budapest in this June 6, 2012 file photo. REUTERS/Laszlo Balogh

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 anticipated.

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.

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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 administration.

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 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 at work.

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 anonymity.

A government spokeswoman declined to comment on the article, as did Magyar Nemzet editors.

Editing by Christian Lowe and Will Waterman