Hungary

Hungary’s competition authority Wednesday levied its highest ever fine in a cartel case against the country’s largest banks, saying they had discouraged home owners with a foreign-currency mortgage from taking part in a program aimed at reducing their loans, The Wall Street Journal Emerging Europe blog reported.

Standard & Poor’s Ratings Services warned Friday that it may downgrade Hungary further into non-investment grade over the next 12 months should government policies weaken investor confidence and the outlook for recovery, The Wall Street Journal Emerging Europe blog reported. Hungary’s creditworthiness remains constrained by its poor growth outlook, limited monetary policy room, and mounting public as well as private-sector debt, it said. “We also believe that institutional checks and balances have weakened in recent years,” S&P said.

Hungarian operator Magyar Telekom announced plans to apply to the High Court of Justice in England and Wales for a court hearing to be held no earlier than 28 October for approval of its earlier announced debt-equity swap, Telecompaper reported. This should include permission to convene a meeting of creditors for approving the scheme. Based on the preliminary agreement reached in July, holders of more than 70 percent of the operator's senior secured notes due 2016 have agreed to support the restructuring.

Talks between Hungary’s government and its banking association over a relief plan for households with foreign currency mortgages are focusing on exchange rates, the timing of a possible debt conversion and interest on converted mortgage loans, the secretary general of the country’s banking association said Tuesday, The Wall Street Journal Emerging Europe blog reported.

Leading Hungarian tour operator Best Reisen Ltd, hit by big losses on holidays to Egypt and Tunisia, said on Friday it had gone bankrupt, leaving hundreds of passengers in Red Sea resorts in Egypt, Reuters reported. The company said it had financial deposits of 1.3 billion forints ($5.75 million) which would cover the costs of bringing passengers home and compensating clients with booked trips. "Best Reisen specialised in North African countries and the Arab spring did them no good," said Judit Molnar, vice chair of the association of Hungarian tour operators.

The sustainability of Hungary’s public debt, the highest in Central Europe as a percentage of gross domestic product, continues to be at risk despite the European Commission’s recommendation that the European Union lift its strict budget monitoring of the country later this month, an analyst from Moody's Investors Service said Monday, The Wall Street Journal Emerging Europe blog reported.

Hungary should bring in personal insolvency legislation to help to deal with bad debts left over from the country's property boom, a senior official from Hungary's central bank said on Wednesday, Reuters reported. "For non-performing (loans) at the moment there is no efficient programme in place," Marton Nagy, managing director at the National Bank of Hungary, said at a business conference. He said there was no mechanism currently to deal with borrowers' entire debt.

Gyorgy Matolcsy, the governor of Hungary’s central bank , on Thursday revealed a package of measures potentially worth up to €4.6bn designed to stimulate growth in Hungary’s flagging economy, the Financial Times reported. Mr Matolcsy, who caused controversy as the architect of Hungary’s “unorthodox economic policy” when economy minister from 2010 until last month, said the plan, dubbed Funding for Growth, would provide cheaper credit to small and medium-sized businesses and reduce foreign exchange risks to creditors.

Hungary wants to impose a punitive 35% capital gains tax on assets its nationals deposited in Switzerland, but it may have a hard time getting information out of the Alpine country, according to a French-based consultancy, The Wall Street Journal Emerging Europe blog reported. The Hungarian government allowed assets to be repatriated under benign conditions of a 10% capital gains tax rate over the past two years ending Dec. 31, 2012, which it referred to as a tax amnesty. The 35% rate it now plans to impose, and apply retroactively, would in comparison count as a penal tax rate.

Hungary's premier on Thursday said his government wouldn't agree to conditions sought by the European Union and International Monetary Fund in exchange for a financial-support package, saying the country would rather forgo help than cut pensions or ease banking taxes, The Wall Street Journal reported. Prime Minister Viktor Orban's tough remarks—a sharp shift from more conciliatory comments he made Wednesday—jolted investors, pushing down Hungary's currency, the forint, and driving up yields on government debt, as well as the cost of insuring it against default.