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.
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.