Hungary, along with the EBRD, will acquire a stake in Erste Bank Hungary and reduce the bank levy, Prime Minister Viktor Orbán said. After signing an agreement with leaders of the banks, he said the government will “significantly” reduce the sectoral tax on banks in 2016-17, with further reductions to follow in 2018. In 2016 the special tax would be reduced by a total 60 billion forints (EUR 195m). The rate of the tax, as well as calculation of the tax base would also change.
The bank levy, introduced as a “crisis tax” in 2010, generated revenue of a little more than the 144 billion forint target last year. This year, the target is the same. Orbán said the size of the stake the state would acquire would depend on due diligence, but would be similar in scale to that acquired by the EBRD, “on condition that we see eye to eye in terms of the price” and other details. Meanwhile, Erste Group CEO Andreas Treichl said that the state of Hungary and EBRD have each been offered 15% stakes in Erste Group’s Hungarian business, under the agreement signed on Monday. Treichl said it was still not clear whether the stakes would be purchased or acquired through capital injections.
The opposition Socialist (MSZP), Liberal and green LMP parties have slammed the government for signing a memorandum of understanding under which the state of Hungary would obtain a stake in Erste Bank Hungary. The Socialists said that “the corrupt government’s move” could cost taxpayers hundreds of billions of forints, and asked who would benefit from the deal. Buying banks in light of Hungary’s current social and economic conditions is unacceptable. The price paid for the Erste stake should be used “to make the life of people easier” and help Hungary’s ailing businesses, they said.
Zoltán Bodnár, economic expert of the Liberal Party, said there was “no reasonable argument” for the Erste purchase, adding that the transaction cannot be financed unless the state debt is further increased, putting an additional burden on taxpayers. He also voiced disagreement with the government’s principle that it is in Hungary’s interest that the majority of its banks should be in Hungarian ownership. Erzsébet Schmuck, a lawmaker of the LMP party, said that the benefits or disadvantages of the deal cannot be evaluated before the final price comes to light. Similarly to earlier purchases, the government could end up paying an unreasonably high price for the Erste stake, she warned.
via hungarymatters.hu photo: Zoltán Máthé – MTI