OTP Drops Most in 2 Months as Loan Plan Rejected: Budapest Mover

OTP Bank Nyrt., Hungary’s largest lender, slid the most in two months after the government rejected a proposal by banks to help households with foreign-currency mortgages.

The stock declined 2.8 percent to 4,375 forint by the close in Budapest, the biggest drop since Aug. 27. About 900,000 shares changed hands, or 9 percent more than the three-month daily average. The benchmark BUX index, of which OTP accounts for about 30 percent, fell 0.7 percent.

Economy Minister Mihaly Varga said the banks’ plan doesn’t solve problems facing borrowers with foreign-exchange loans, according to state news agency MTI. Lenders submitted a set of proposals last week that included helping people service their debt and temporarily suspending evictions for some borrowers, news website Hirado.hu reported Oct. 26, citing Levente Kovacs, secretary general of the Hungarian Banking Association.

“The minister’s statement comes just as the banks’ and the government’s standpoints had seemed to be nearing” Peter Varju, a Budapest-based equities trader at Erste Group Bank AG said by phone. “This doesn’t necessarily mean there will be a blood-bath as there are scenarios that would cause banks less harm, but hope for a deal may vanish from the market.”

The government has promised to help borrowers whose loan installments spiraled due to a weaker forint. Banks in Hungary lost $1.7 billion during a 2011 program that allowed the early repayment of foreign-currency mortgages at below-market exchange rates in a lump sum.

Prime Minister Viktor Orban’s government, which faces elections in 2014, promised to phase-out foreign-currency mortgages after earlier initiatives failed to ease the burden of Hungarian households with almost $17 billion in such loans.

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