OTP Bank Climbs for Fourth Day on FX-Loan Report: Budapest Mover

OTP Bank, Hungary’s largest lender, rose for a fourth day after Nepszabadsag newspaper reported that the government has rejected “radical” plans to phase out foreign-currency mortgage loans.

OTP advanced as much as 2.7 percent and traded 0.6 percent higher at 4,472 forint at 11:16 a.m. in Budapest. The stock has jumped 6.9 in the past four days and is heading for its largest weekly gain in six months. The BUX index increased 0.3 percent.

The cabinet has dropped “radical” plans to reduce the stock of such loans, and will limit the cost of measures, daily Nepszabadsag reported today, citing an unidentified source close to Prime Minister Viktor Orban. The government is seeking to phase out foreign currency household mortgage loans and will consider the burden that can be imposed on banks, Economy Minister Mihaly Varga told state news agency MTI yesterday.

“The fact that the government rejected the most drastic solutions is definitely very positive for OTP, based on the information of the newspaper,” Attila Gyurcsik, an analyst at Concorde Securities, Hungary’s largest brokerage, said in an e-mail today.

The Hungarian government is preparing a second round of help for households with foreign-currency mortgages after measures introduced since 2011, such as fixing exchange rates at below-market levels and allowing early repayments of loans. The depreciation of the forint against the euro and the Swiss franc has increased mortgage installments for more than $16 billion in loans.

‘Investor Angst’

OTP shares plunged 17 percent in the four days through July 19 after the Justice Ministry said the cabinet is looking at the possibility of modifying the conditions of foreign-currency loans. The stock extended losses last week as Chief Executive Officer Sandor Csanyi sold shares.

“The mood music over recent days has been more encouraging, as officials appear to aim to smooth investor angst,” Timothy Ash, chief emerging-market economist at Standard Bank Group Ltd. in London, said in an e-mail today.

OTP jumped 4.7 percent yesterday, the most in a year, as Csanyi said the bank “can survive” any sort of government program to help foreign-currency borrowers. A solution similar to the early repayment of such loans in 2011 would put planned domestic acquisitions on hold, he told reporters.

Csanyi also denied media reports that he was planning to leave the job he has carried out since 1992.

To contact the reporter on this story: Marton Eder in Budapest at meder4@bloomberg.net

To contact the editor responsible for this story: Zoltan Simon at zsimon@bloomberg.net

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