OTP Drops in Longest Losing Streak in 11 Months: Budapest Mover

OTP Bank Nyrt., Hungary’s largest lender, fell for a sixth day as the government proposed a plan that allows customers to withdraw a limited amount of cash without paying a transaction tax, forcing banks to take the hit.

The stock slid 1.1 percent to 4,189 forint by 2:08 p.m. in Budapest, extending declines to the longest stretch of losses since November. About 520,000 shares changed hands, or 45 percent of the three-month daily average. The benchmark BUX index (BUX), in which OTP has the second-biggest weighting at 29.4 percent, slipped 0.5 percent.

Lawmakers from Hungary’s ruling Fidesz party have suggested banks offer two free cash withdrawals in a month, making lenders swallow a 0.6 percent tax that would still be payable to the government. The step will further burden the banks that already pay the highest industry levy in the European Union.

The government is getting “tough in its rhetoric on banks” Istvan Kralik, a senior equities trader at KBC Securities, said by phone from Budapest.

The government has set a Nov. 1 deadline for lenders to agree on phasing out foreign-currency mortgages. Prime Minister Viktor Orban said on Sept. 6 Hungary will move ahead with “eliminating” such loans if commercial banks failed to act.

The uncertainty over foreign-currency loans is also weighing on the stock, KBC’s Kralik said. “We see a high probability that the mortgage situation will be fixed under the government’s terms.”

‘Fast Buck’

Lenders should be able to levy charges to cover the cost of cash withdrawals, Hungary’s Banking Association said in a statement on Oct. 4.

Banks won’t be allowed to “make a fast buck on Hungarian families,” Antal Rogan, the leader of Fidesz’s parliamentary group, said on Oct. 5, the state news service MTI reported. Two free cash withdrawals a month for as much as 150,000 forint ($686.8) is a consumer right, he said.

OTP shares have dropped 13 percent in the past three months, the second-steepest retreat among 16 eastern European banking stocks tracked by Bloomberg. Five analysts recommend investors buy the shares, while 12 have a hold rating and 4 say sell, data compiled by Bloomberg show.

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

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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