The government is selling its 5% stake in OTP today

HUNGARY - In Brief 29 Oct 2015 by Istvan Racz
The government is selling its whole 5% ownership stake in OTP through a market auction today, in a step that was not announced previously. The revenue collected was HUF75bn or 0.24% of GDP. Cabinet minister Lázár said this move will not affect the government's target to keep at least 50% of the banking system in Hungarian ownership, and that the government will use the revenue to fund fixed investment projects. All this requires a bit of explanation. Speaking of the minimum 50% domestic share they want to keep in the banking system, government officials normally speak of 'ownership' but mean 'ownership or management'. And even though OTP is majority foreign-owned anyway, it is under Hungarian management, and so it counts as a Hungarian bank by the official definition. This is crucial in meeting the government's target, of course, as OTP represents over 20% of the domestic banking sector, even on non-consolidated basis. But the government's ownership stake is not perceived as a tool to keep OTP 'Hungarian'. Regarding the motive behind this sale, this is likely to do with the government's expected problem with its gross debt ratio at end-2015, which we mentioned in our recent monthly reports. All this is due to the uncertain payment schedule of EU development transfers. To date (29 October), the government has paid out HUF1519bn on EU-sponsored development projects - mainly infrastructural - so far this year, including its roughly 15% required own contribution. In turn, the EU has reimbursed only HUF566bn, and the timing of the remaining payments is uncertain. Should the government meet its annual fiscal deficit target and pay out all the funds on EU-sponsored projects a...

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this or its contents.