Banking Association Disagrees With Compensation For Quaestor Clients
Tamás Székely 2015.04.20.
The Hungarian Banking Association believes clients of failed brokerage Quaestor should not receive any compensation, chief secretary Levente Kovács said on public radio. Kovács noted that Quaestor had clearly informed its clients that its securities, which paid a yield well over that of government securities, were covered neither by the National Deposit Insurance Association (OBA) nor the Investor Protection Fund (Beva).
“I do not think it is ethical for somebody to ask to be compensated if that person was not insured,” he said. He added that the Constitution would appear to support the Banking Association’s stand on the matter. Lawmakers recently approved legislation establishing a top-up fund to compensate Quaestor clients who bought some 150 billion forints in unsanctioned bonds. Setting up the fund effectively raises the compensation threshold for the clients from the equivalent of 20,000 euros to 100,000 euros, footing Beva members with the bill. Kovács acknowledged the government’s efforts to stick to an agreement with the EBRD that requires consultations with lenders before burdening the banking sector further, adding that consultations were under way. He said the bank levy would be reduced but the reduction would be much smaller than the amount banks must pay into Beva to compensate Quaestor clients.
Previously Sándor Csányi, president-CEO of OTP Bank, said that it was unfair for the rest of the financial sector to pay for the losses racked up by other investment firms. According to him, investment service providers who run a clean business have no way of influencing others who do not, so sharing the losses is “definitely unjustified.” However, last week the Hungarian Parliament approved a law on setting up a fund to compensate people who suffered losses because of the bankruptcy of brokerage firm Quaestor. In line with the law approved with 185 votes for and 5 against, compensation can be claimed between May 6 and June 5. The law covers transactions involving bonds issued by Quaestor Financial Hrurira and sold by Quaestor Securities Trading and Investment or associated businesses. Under the law, the Quaestor Victims Compensation Fund, in conjunction with the Investment Protection Fund (Beva), will hand out up to 30 million forints per client in compensation.
In response to the Hungarian Banking Association’s claim, ruling Fidesz party said that the compensation for Quaestor clients would be only a temporary burden for the Hungarian financial system, because later the banks will be re-compensated from the assets seized from the bankrupted Quaestor group.
via hungarymatters.hu and MTI photo: Zsolt Szigetváry – MTI