OTP Bank Nyrt., Hungary’s largest lender, fell the most in three weeks on concern banks will bear the cost of mortgage rescue plans and as a stalemate among U.S. lawmakers on the debt limit cut appetite for riskier assets.
The stock slid 2.2 percent, the most since Sept. 20, to 4,265 forint by the close in Budapest. More than 394,000 shares changed hands, or 36 percent of the three-month average. The benchmark BUX index, in which the bank has the largest weighting, retreated 0.5 percent. OTP has declined 15 percent since Prime Minister Viktor Orban’s government said on July 16 it plans to “phase out” foreign-currency mortgages.
Lenders have until Nov. 1 to present debt-relief proposals for remaining borrowers. The cabinet is “disappointed” by a lack of determination to meet the deadline and stands ready to present its own plan, Economy Minister Mihaly Varga was cited as saying in Nepszabadsag newspaper on Oct. 12. Emerging-market stocks fell from a four-month high as Senate leaders struggled to reach an agreement on how to end the fiscal impasse.
“Global markets weakened on disappointment that there was no deal on U.S. debt,” Zsolt Balasy, a Budapest-based analyst at MKB Bank Zrt., a unit of Bayerische Landesbank, said by phone. “The Hungarian market is an underperformer in the region as it’s suffering from the government’s unorthodox policies and the foreign-currency mortgage rescue plan is hanging over OTP as a risk.”
Hungary was stripped of its investment-grade credit rating in 2011 after allowing borrowers to repay debt at below market-exchange rates, giving banks a $1.7 billion loss.
European Central Bank President Mario Draghi told Orban not to take “uncoordinated” steps on converting home loans, Austrian newspaper Der Standard reported today, citing Austrian central bank governor Ewald Nowotny. Hungary pledged to “coordinate” its policies after the warning, the newspaper cited Nowotny as saying.
The government may impose a further round of utility-price cuts before next year’s elections after a 10 percent reduction implemented in January and another 11 percent planned for November, Varga said in the Nepszabadsag interview.
Magyar Telekom Nyrt., the Hungarian unit of Deutsche Telekom AG, which started selling electricity and gas to households three years ago, lost as much as 2.4 percent to 287 forint, the lowest on record, before closing at 293 forint.
The forint fell 0.5 percent to 296.4 per euro, extending its decline in 2013 to 1.7 percent, the fourth-best performance among 24 emerging-market currencies tracked by Bloomberg.