OTP Climbs as Forint Advances on Home-Loan Plan: Budapest Mover

OTP Bank Nyrt., Hungary’s largest lender, rose to the highest level in more than three months and the forint rallied after the ruling Fidesz party proposed expanding measures to help foreign-currency mortgage borrowers.

Shares of the lender jumped 4 percent to 4,700 forint, set for the strongest close since July 17, by 4:15 p.m. in Budapest. The stock, which accounts for a third of the benchmark BUX index, lead the gauge’s 1.9 percent gain. The forint strengthened the most against the euro and the dollar among 24 emerging-market currencies monitored by Bloomberg.

The Fidesz party proposed expanding a program to allow borrowers to temporarily repay loans at fixed, below-market exchange rates, Antal Rogan, the parliamentary leader, told reporters in Budapest today. Prime Minister Viktor Orban’s cabinet vowed in July to phase out all foreign-currency loans, triggering bets banks would post losses and contributing to OTP’s 4.7 percent drop that month. The shares climbed 3.9 percent in October.

“Investors are beginning to price out a worst-case scenario,” David Sandor, a Budapest-based analyst at KBC Securities, a unit of KBC Groep NV (KBC), said by phone. “Most people expect them to carry out the conversion of foreign-currency loans over several years. This may only be a first step but the market no longer expects something really radical.”

The forint appreciated 0.5 percent, the most since Sept. 18 on a closing basis, to 296.01 per euro, after losing 0.7 percent on Nov. 1, which was a holiday in Hungary.

The measures proposed by Rogan offer a temporary solution until courts clarify rulings on the validity of foreign-currency home loans, Andras Giro-Szasz, a spokesman for the government, told reporters today. “Contradictory” court rulings prompted delays in the cabinet’s planned overhaul, Economy Minister Mihaly Varga said last week.

“The market sees it as good news that the foreign-currency loan rescue proposal outlined today doesn’t contain any details which would be a threat for Hungary’s currency,” Gergely Palffy, a Budapest-based analyst at Buda-Cash Brokerhaz Zrt., said by phone today.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

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

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