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OTP Falls Most in Four Weeks on Bank Tax; BUX Index Declines

OTP Bank Nyrt. fell the most in four weeks, pushing Hungary’s BUX stock index lower, as Prime Minister Viktor Orban said he intended to keep a bank tax and presented a plan to fix exchange rates on mortgages.

The benchmark BUX index of shares dropped 1.2 percent to 22,786.92 by the 5 p.m. close in Budapest. OTP, the country’s biggest lender, weakened 2 percent to 5,920 forint, the biggest drop since May 3. The nation’s currency depreciated 0.3 percent to 268.4 per euro.

The bank tax is an “organic part” of the Hungarian budget, Orban told reporters in Budapest today. If a European Union bank tax is adopted by the end of 2012, then the Hungarian government will introduce that levy once a three-year bank tax expires at the end of 2012, Orban added.

“The special tax will remain a risk for earnings beyond 2012 for the two domestic listed banks, OTP and FHB,” analysts at Equilor Befektetesi Zrt. led by Akos Kuti wrote in a research note after Orban’s comments, referring to Foldhitel es Jelzalogbank Nyrt., Hungary’s second-largest mortgage lender.

FHB snapped two days of gains, retreating 0.7 percent to 950 forint, the biggest drop in a week.

“Foreign investors will probably allocate fewer resources to the Hungarian financial sector than other countries in the region due to this sector tax,” Elisabeth Andreew and Peter Klinke, analysts at Nordea Bank AB, wrote in a report today.

The government and lenders agreed to fix the exchange rate on Swiss franc-denominated mortgages at 180 forint per franc until the end of 2014 to help borrowers after a moratorium on evictions expires in July, Orban said.

The plan “sweeps the problems under the carpet,” saddling banks with the costs and hurting economic growth, Zoltan Torok, an analyst at Raiffeisen Bank International AG in Budapest, wrote in a research note.

The forint weakened 0.4 percent against the franc to 220.755, extending its losses this month to 6.6 percent, the biggest slump since November.

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