Erste, UniCredit, Intesa, KBC, Raiffeisen Commit to Hungary Even After Tax
Erste Group Bank AG, Intesa Sanpaolo SpA, KBC Groep NV, UniCredit SpA and Raiffeisen Bank International AG, five of Hungary’s seven largest lenders, said they aren’t planning to pull out of the country.
Hungary this year imposed a special levy on the financial industry to plug a hole in the budget. The levy has drawn criticism from the European Central Bank and the International Monetary Fund for its size.
Three lenders are mulling closing their operations in Hungary because of the tax, the daily Budapest-based Nepszava said today, without citing anyone or naming the banks. The central bank doesn’t know about any banks considering to pull out, Magyar Nemzeti Bank Vice President Julia Kiraly told reporters in Budapest today.
“Hungary is one of the home markets where we want to be present,” Viviane Huybrecht, a spokeswoman for KBC in Brussels, said by telephone today.
Raiffeisen Bank is “committed to Hungary and has no intention of withdrawing from its banking market,” spokesman Peter Klopf wrote in an e-mail.
Erste Chief Executive Officer Andreas Treichl said he could see no circumstances in which the lender would pull out of Hungary, the Financial Times reported. Investment in the country’s banks will dry up unless the government changes its tax policy, he said, according to the FT.
‘Strategic Interest’
Hungary is a “strategic interest” to Intesa, a spokeswoman said, adding that the bank is a “reliable and long- term investor” in the country. UniCredit doesn’t plan to exit and its plans for Hungary haven’t changed, a spokeswoman said.
Hungary’s largest foreign-owned banks last year pledged to keep doing business in the country and add capital as needed to cope with the worst recession in 18 years. Bayerische Landesbank, Erste Bank, Intesa, KBC, Raiffeisen Bank and UniCredit in May 2009 reiterated their commitment to the country at a meeting in Brussels.
“The Magyar Nemzeti Bank has no information about any bank planning to pull out of the Hungarian market,” Kiraly said. “At the same time, we consider the biggest risk of the bank tax being the banking system’s reduced ability to attract capital and thus its ability to lend.”
OTP Bank Nyrt. is Hungary’s largest lender by assets, followed by KBC’s local unit K&H Bank Zrt., Bayerische Landesbank’s MKB Bank Zrt., Erste Bank Hungary Nyrt., Intesa’s CIB Bank Zrt., Raiffeisen Bank Zrt. and UniCredit Bank Hungary Zrt., according to a May study by the International Training Center for Bankers in Budapest.
Revenue from the bank tax will total 182 billion forint ($941 million), the government said on Oct. 1. Hungary is ready to take further measures to make sure it meets this year’s budget-deficit target of 3.8 percent of gross domestic product, Prime Minister Viktor Orban said today.
To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net
To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net.
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