OTP Falls to 2013 Low on Banks’ Loan Plans: Budapest Mover

OTP Bank Nyrt., Hungary’s biggest lender, dropped for a third day to the lowest this year after the country’s banks said they would assume losses as part of plans to phase-out foreign-currency mortgages.

Shares fell as much as 1.9 percent and were down 0.5 percent to 4,170 forint by 12:40 p.m. in Budapest, the lowest level since Dec. 28 on a closing basis. Banks would assume a burden of “several hundreds of billions of forint over a period of several years,” Mihaly Patai, head of the Banking Association, told reporters yesterday after presenting proposals to Economy Minister Mihaly Varga.

Hungary’s lenders, burdened by the largest bank tax in Europe and a levy on financial transactions, face additional losses as the government plans to phase out $8 billion in foreign-currency mortgages. Borrowers fell behind on payments as the forint plunged and the Swiss franc soared following the 2008 global credit crisis.

“Uncertainty is still weighing on OTP’s share price,” Akos Kuti, the Budapest-based head of research at Equilor Befektetesi Zrt., said in an e-mailed note.

OTP has slumped 8 percent in August, extending a 4.7 percent decline in July, when the government announced its plans. The slump in emerging-market assets fueled by political tension in Syria and speculation that the U.S. Federal Reserve will reduce the size of its asset purchases have added to the shares’ losses.

Hungary’s cabinet is set to discuss the banks’ proposal today and talks are scheduled to continue tomorrow.

“Should a deal be finally reached, that would help the shares a lot,” Zsolt Kondrat, an economist at MKB Bank Zrt., the Hungarian unit of Bayerische Landesbank, said in an e-mailed note.

The share’s 14-day relative strength index fell to 36.3, the lowest in more a month, according to data compiled by Bloomberg. A reading below 30 suggests to some traders a stock may be poised to rise.

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