Hungary Loan Plans Among Reasons for OTP Share Sale, Csanyi Says

OTP Bank Nyrt. Chief Executive Officer Sandor Csanyi said a government proposal to help foreign-currency borrowers, which may hurt banks, prompted him to speed up plans to sell most of his company shares.

Csanyi, the head of Hungary’s largest bank, raised 10.7 billion forint ($48 million) by selling 2.35 million shares in two days last week. The share price lost as much as 17 percent, stoking concern the government’s plan may put earnings at risk. Csanyi said he will use the sale proceeds to finance investments in his agricultural and food business.

Prime Minister Viktor Orban, who faces elections next year, wants to help borrowers saddled with more than $16 billion in mostly Swiss franc-denominated mortgages, whose payments soared as the forint dropped during the global credit crisis. Banks holding the mortgages would carry some of the exchange losses, according to government proposals the cabinet is debating today, Nepszabadsag newspaper reported.

“News that the government was considering the foreign-currency debt problem had an impact as I authorized the sale at a lower share price,” Csanyi said at a press conference in Budapest today. “I would’ve sold these shares anyway, it was in my plans for this year.”

The government wants to “phase out” foreign-currency home mortgages and will consider the time it takes and the burden that can be imposed as it works on a solution, Economy Minister Mihaly Varga told state news service MTI today.

Family Holdings

“I personally and my family members also hold OTP Opus bonds, so there’s no question that I have any doubts on whether OTP is a good investment,” Csanyi said.

The 60-year-old executive rejected a report in daily Magyar Nemzet that he sold shares because he planned to retire for health reasons.

“I have entirely recovered” from a February heart surgery, “my physical condition is better than before the operation,” he said.

OTP shares plunged in the three days through July 19 as Csanyi sold all but 10,000 of his personal holding of the stock. It gained 4.6 percent to 4,442 forint by 2:12 p.m. in Budapest today.

OTP “can survive” any sort of government program to help foreign-currency borrowers, Csanyi said, adding that a solution similar to the early repayment of such loans in 2011 would put planned domestic acquisitions on hold.

OTP dropped 36 percent and the forint weakened 12 percent in 2011, when the government forced banks to take losses by allowing borrowers to repay foreign-currency loans early at below-market rates.

“I can only hope the government will consult with banks on the foreign-currency loan plan,” which must have burden sharing, Csanyi said.

To contact the reporters on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net; Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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