As Portfolio, the bilingual financial site, said today, “everybody was sitting on pins and needles” waiting for the cabinet decision on the fate of the loans issued in foreign currencies. However, it seems that the government wisely postponed the decision. So, for a while we will not know what kind of a solution the government will come up with.
An announcement of the decision at this point could have had an adverse effect on the financial and economic health of the country. Coming so soon after Sándor Csányi, the CEO of OTP, and some of the bank’s top officials sold millions of OTP shares, such an announcement might have further roiled the financial markets and would probably have had a negative effect on the value of the forint. As it was, the forint weakened, although not significantly, after the National Bank’s expected announcement that it would once again lower the interest rate, now down to 4%.
But there was another much awaited event, Sándor Csányi’s press conference after his return from an African safari. He managed to calm investors’ nerves; OTP closed up 4.7% today.
The press conference itself was quite unusual in that it was by invitation only. Let me first list the media outlets whose reporters were not invited: Kossuth Rádió, Magyar Televízió, Hír TV, Magyar Nemzet, HVG, and Index. Csányi invited TV2, ATV, Népszabadság, Origo, RTL Klub, and the Hungarian news agency MTI. As for the foreign press, reporters from Dow Jones, Bloomberg, and Reuters were present. In brief, the pro-government news outlets were pretty well ignored.
Sándor Csányi, the gracious host
First of all, Csányi made it patently clear that he has no intention of leaving his post as CEO of OTP. He made some references to Magyar Nemzet‘s false rumors about his health which he claimed is excellent. After all, he just walked 15 km in 40ºC in Africa. As to why he sold such a large number of OTP shares, Csányi partially stuck to his earlier explanation of his plans to open a large slaughter house in Mohács for which he needed capital. However, he admitted that since the value of OTP stock had been so volatile of late, he left word to sell if the shares fell to a certain price.
Csányi denied any intention “to send a message” to the prime minister via his stock sale. “I know Viktor Orbán. He doesn’t get scared easily.” Selling his stock would have no more effect on Orbán than attacking him with paper planes. He refused to see the government’s action as an attack on him personally or on his bank because, after all, OTP wasn’t handled any differently from the banking sector as a whole. On the other hand, he did make some malicious remarks about János Lázár, who recently attacked Csányi and his “empire,” comparing OTP to an octopus. He described it as a powerful organization with far-reaching tentacles that caused harm to the country as a whole. While claiming that these personal attacks don’t bother him, Csányi couldn’t help making a dig of his own. He told the reporters that he doesn’t know Lázár well, but people have told him that Lázár is a clever politician and a good organizer. He added, “We see how well he handled the tobacconist affair.”
But Lázár wasn’t the only target of his caustic remarks. Csányi expressed surprise at Magyar Nemzet’s decision to come out with the story of his heart operation only now when the owners of the paper, including Lajos Simicska, already knew all about his operation in February. Reporters naturally asked his opinion of the Orbán government’s decision to nationalize the 104 credit unions and inquired whether that would in any way adversely affect the interests of the banking sector. According to Csányi, the nationalization of the credit unions might actually benefit the banks. It is very possible that those who used to bank with the credit unions will move over to the commercial banks.
Otherwise he praised Zsolt Hernádi, CEO of MOL. Hernádi certainly needs every bit of help he can get at the moment because the old bribery charge against him has been revived. Croatian prosecutors accuse him of bribing Ivo Sanader, the former prime minister of Croatia, in order to obtain a majority share in INI, the Croatian oil company. Sanader is currently serving a ten-year sentence in Croatia. These accusations surfaced already in 2011 but the Hungarian prosecutor’s office refused to allow the Croats to question Hernádi. But Croatia’s efforts have intensified and now that it is part of the European Union it has a better chance of obtaining a European arrest warrant against Hernádi.
As for what will happen with the forex mortgages, the fear is that the government is thinking in terms of a “comprehensive” solution to the problem. That is, not only will those who are unable to pay their mortgages be offered some relief but everybody who ever took out a forex loan. That may mean, according to the calculation of Index, 675,000 individuals. It’s no wonder that the government postponed the decision.
Hungarian Spectrum 
First I wish him no bad health, but from experience with friends and family members (assuming a by-pass operation) such operation is always heavy and result normally in a change in life style and “heavy” training.
The question I have, he is not only working for OTP (two functions), Hungarian Football Association, Bonafarm Group, various other companies and foundations how does he find time to do all this?
Let’s see if we can follow the numbers. The biggest shareholder of OTP is Megdet Rahimkulov–an interesting billionaire (#721 on Forbes list of billionaires). A long time ago he was an official at Gazprom. He became suddenly rich and became the head of Panrusgaz, a Hungarian company established in 1994, and financed by Gazprom. Megdet
also had a taste for banking, setting up Altalanos ErtekForgalmi Bank. After selling that off, he started accumulating OTP shares in which he now owns 9%–the largest shareholder.
Now, of all the places for this fine figure of a businessman, this self-made billionaire, to live, he’s picked….(wait for it)….FELCSUT! Now, ain’t that sumpthin’…?
London Calling!
This whole on/off, might be/might not be announcement about further helping Forex Loanees out of their financial nightmare shows how much of a one-man-band this government is.
I have no doubt that ‘OTP’ events have made Orban realise that he is stretching Fideszians’ loyalty to the limits in order to ‘buy’ the voters.
And as more and more European members are slowly crawling out of recession – with Hungary’s crawl slower than many – he may be beginning to doubt his own propaganda – that Europe is falling apart and only Hungary has the answer.
That was always complete balderdash of course.
And looking East is turning sour – as China’s economy – Orban’s preferred business partner – slows down. And Orban’s overtures are bearing little fruit.
As the tide turns the main reserve currencies will begin to turn off the QE tap – and we will see who is not wearing swimming trunks as the tide goes out.
And Orban’s economic policies will be under pressure – probably enormous pressure – and only then will the Hungarian nation begin to see how maverick their beloved leader is.
Expect a complete exodus – or complete stasis of investment – of the telecoms companies as The EU is rebuffed by France over extra taxes on Multinationals. Orban can now tax them to the hilt. Watch out Foreigh Banks,Tesco’s, Vodofone et al
OTP is positioning itself for the coming storm – and no doubt the foreign banks are too – but without the fanfare.
There is a lot more ‘isolation’ yet to come – and the inexperience of the Matolcsyites will have a bumpy ride.
He will be in uncharted territory – and won’t be able to copy the Bank of England’s strategy any more.
So interest rates 4% and going lower.
When the Forint weakens it will drop like a stone
Regards
Charlie
I am sorry that I am dragging this on, as only one person seemed to be interested about this off-topic subject. Let’s face it the Pride discussions or the rights of the philosophers garnered more outrage, then the city that that has 80% gypsy population, received millions from the EU for workplace creations, hired a single Roma woman, and busses workers in from other towns. So, if you think this is not a Hungarian issue, feel free to skip this comment. I understand it is off-topic (although it was not in the original about the Mess Exodus of Hungarians (as longs as we consider -as we should- Hungarian gypsies, Hungarian.
The bakery said that people would not purchase their baked goods of gypsies.
THe news interestingly came from MTI regarding the demonstration that took place in front of the bakery (only gypsies present). The news was picked up by three media outlets: Index, Stop, and HVG. THe comments on Stop are interesting as the bad experiences of the town with its Roma population prompted some people to take the side of the bakery.
My take is that these people protest to be able to work, and I do not see why they should not. THe bakery promised over thirty new jobs, and it is hard from me to believe that in the medium sized bakery all the jobs would require higher degrees. My comments on the Detki Keksz page were removed. THe bakery enjoys grants from the Hungarian government and from the EU.
@Some1: This is what I understand: a bakery, receiving money from the Hungarian government as well as the EU, did not hire the local Roma, but people bussed in. The purpose of the funds was to increase employment in the city itself. So, it did not help the local people without jobs. The bakery claimed that people would not buy products made by Roma. Two thoughts: the city is 80% Roma so it would seem that there are plenty of people who would buy, and, it is the baker’s responsibility to oversee the quality of the work done–whether by Hungarian Hungarians, Roma Hungarians, whoever he employs. The baker should stand behind his products!
London Calling!
Some1 where do we begin?
In a commocracy that has so many problems?
This is not only a failure of the EU in not auditing their grants – they never do – but the cynical exploitation of Hungary’s government in taking the dosh – knowing there will be no accountability.
A decent democracy would not have to be told how to apply the funds – they would be trusted to apply them properly.
Orban and co know this of course – and they know yet again they will get away with it under the ‘don’t-tell-us-what-to-do-with-our-money’ mantra.
(Not yours, Orban-net-receiver-Hungary. Mine.)
Pure cynical exploitation – that the EU will eventually have to deal with. And the more they delay, the more difficult it will be.
Unfortunately the Roma are the underclass in this commocracy and will always be prejudiced against until they become:
“Free at last; free at last – Lord God Almighty – Free At Last”
How can we change things outside?
Regards
Charlie
@CharlieH
“How can we change things outside?”
You can’t.
As long as the Hungarian mindset is shaped by the Catholic Church in league with the Nationalist/Populists who, in broad daylight, rob the country blind….there is no hope for the badly educated throng that back Fidesz. Had the ‘crowd’ been even a little educated, they would’ve known that it isn’t even what Fidesz is doing–which is certainly bad in itself–but THE WAY IN WHICH THEY GO ABOUT GOVERNING…that raises the red flag, and a god-awful stink with it.
How does one convince the multitudes that governance is best done by INSTITUTIONS, whose growth must be nurtured, respected, and protected…not shredded as Orban has done.
Seems, that the gloves about to come off.
Somewhere it may even be entertaining to see – from a safe distance, as is my case – as they start to turn against each other, but if one looks at the whole picture, the loser at the end called Hungary.
And the ‘lord of the flies’ rules – once again.
Perfect description. They had enough and also they might be looking for an insurance policy. I wouldn’t be at all surprised that if the opposition would get some money from these guys. Demján is also fed up. Csányi already gave some money to Bajnai as we know from Bajnai himself. I’m sure that Orbán didn’t like that a bit.
Power-play in the sandbox…
Being a first-generation parvenue has it’s drawbacks, obviously. Greed coupled with delusions of grandeur could produce quite interesting outcomes, and there is no upper limit as I see them.
However, Csányi appears to have more sense of reality, but I still have my doubts, who is about to win.
The identity of the loser is the sure thing alone, as I sand.
… as I said, not ‘sand’, sorry, the spell checker attacked me..!