Bloomberg Anywhere Remote Login Bloomberg Terminal Request a Demo

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

OTP Bank Declines on Muni Debt Discount Report: Budapest Mover

Oct. 31 (Bloomberg) -- OTP Bank Nyrt., Hungary’s largest lender, snapped two days of gains after news website Origo reported the government plans to apply discounts of as much 25 percent when it transfers municipal debt owed to banks to the central budget.

The shares fell 1.7 percent to 4,150 forint by the end of trading in Budapest, paring the advance this month to 6.6 percent. The benchmark BUX stock index rose 0.1 percent, extending its gain in October to 3.4 percent.

Prime Minister Viktor Orban’s government, which has been working to cut the biggest sovereign debt burden in the east of the European Union, is extending its “war” on liabilities by taking over $2.8 billion in local council debt, Orban said on Oct. 27. The government may pay between 75 percent and 80 percent of the face value on some of the riskier municipal debt, forcing banks to write off the rest, and settle in bonds not cash, Origo reported, without citing anyone.

“The news is negative for investor sentiment,” Zoltan Arokszallasi, an analyst at Erste Group Bank AG, wrote in an e-mailed report. “In the worst case, losses for the banking sector would be very significant and thus detrimental to lending and the gross domestic product outlook.”

The prime minister’s press office declined to comment on the Origo report when contacted by e-mail.

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

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.