Banks in Hungary eye post-austerity growth plan

BUDAPEST (Reuters) - Hungary's banks, smarting from an extension of Europe's highest bank tax, are counting on looser policy once the economy picks up, the interim chairman of the Hungarian Banking Association said.

The country's banks are looking for ways to work with the government, said Daniel Gyuris whose predecessor Mihaly Patai resigned as chairman last week in protest at new taxes on the financial sector.

The government of Prime Minister Viktor Orban has milked banks heavily as the indebted central European country of 10 million people struggled to keep its budget deficit within European Union limits to avoid financial sanctions.

Last week, Orban made permanent the bank levy, which at one stage was intended to be phased out by 2013, causing a shock among bankers and forcing a review of banks' lending strategies for the years ahead.

Gyuris told Reuters in an interview late on Wednesday that banks will review any cooperation on a project-by-project basis and keep looking for opportunities to cut risk and lend to viable businesses.

"I don't believe austerity will last forever," said Gyuris who also heads OTP Bank's mortgage unit. "We should not treat these matters on an emotional basis."

Gyuris added however there would be no new broad accord such as the one the sides brokered last year only for the government to renege on its pledge to ease the hefty bank levy.

Analysts expect austerity to further stifle recovery prospects after a recession this year, putting pressure on Orban's government to find ways to restore growth as it prepares for an election in 2014.

"Once the goal of growth becomes the top priority of this government instead of the singular goal of deficit containment, we believe that will necessitate a new attitude toward lenders," Gyuris said.

Despite several rounds of "shocking" measures that Orban's government slapped banks with over the past two years, Gyuris said lenders remained open to working with the government.

END OF AUSTERITY?

Gyuris said government austerity was probably close to an end as the budget-cutting measures, by most accounts, guarantee that Hungary would fulfill the European Commission's criteria and allow its exit from a deficit surveillance procedure next year.

"Most people believe managing the deficit... is complete," he said. "Growth is the most important and least painful way to make that structurally sustainable over the long term."

"We believe the government will find a way to cooperate with banks despite the higher bank tax. One way to do that would be to offset the bank tax with any measurable increase in business activity."

He said banks would be especially keen to participate in export pre-financing, agricultural financing or guarantee programs and co-financing for EU-funded projects.

With Hungary facing a potentially deep cut in EU subsidies as richer member states seek to cut back spending in the 2014-2020 period, Gyuris said it was paramount that every last cent of remaining funding is used.

"Nobody can afford the luxury of not using every last bit of our reduced share after the EU budget is finalized," he said.

EU leaders are due to thrash out a budget for the 2014-2020 period at a summit beginning on Thursday.

(Reporting by Marton Dunai and Gergely Szakacs)

Source: http://news.yahoo.com/banks-hungary-eye-post-austerity-growth-plan-110711154--finance.html

matt groening brandon phillips summerfest summerfest fidel castro rick santorum ozzie guillen castro comments