31. 08. 10. - 15:00

Hungarian bank tax a 'prime example for a misguided measure'

Raiffeisen International (RI) boss Herbert Stepic has launched an exceptional attack on the Hungarian government over its decision to set up a bank levy.

Stepic said today (Tues) the recently introduced taxation scheme was a "prime example of a misguided measure".

He explained the tax will have burdened RI with 36 million Euros by the end of this year, adding that the levy "will not solve Hungary’s structural problems".

Stepic claimed the country might rake in more taxes but its economy will grow slower due to the bank solidarity tax which orders banks operating in Hungary to hand over 0.45 per cent of their annual net assets.

Stepic said earlier this month that the Hungarian bank tax was the "worst thing to happen" stressing at the same time that RI will not stop doing business in the country which became a member of the European Union (EU) in 2004.

RI’s turnover more than trebled from 21.8 million Euros in the second quarter of last year to 70.7 million Euros in the same time span this year. Its earnings before interest and taxes (Ebit) improved from 154 million Euros to 304 million Euros year on year.

Presenting RI’s second quarter figures today, Stepic did not make clear whether he will extend his contract as firm chief which expires next year.

Speaking about Austria’s bank tax plans, Stepic said it seemed "impossible to avoid them", adding they will not have as harsh effects as the Hungarian levy.

The federal government announced earlier this year such a levy will come into force next year to enforce the country’s biggest banks to help it restore the state budget.

Austria’s leading banks have received more than 7.5 billion Euros in state aid since the beginning of 2009 in a bid to prevent them from collapsing under the credit crunch’s impact.

Social Democrats (SPÖ) and People’s Party (ÖVP) hope to rake in an extra 500 million Euros in tax takings with the bank solidarity tax annually from 2011. Some economists however warned bank customers will be forced to shoulder the pressure in the form of raised account charges.

SPÖ and ÖVP are at odds which facts should decide how much money banks will have to fork out – their net assets, earnings, turnover, number of customers, risk level of speculative investments or some other aspect.

RI manages Raiffeisenzentralbank’s (RZB) in Eastern European (CEE).

RZB is Austria’s biggest private employer with one in 10 Euros generated in Austria being attributed to the institute. RZB also has a significant influence on the press by holding interest in some newspapers and magazines. The company has around 2,200 branches across the country.

RZB and RI merged earlier this year – just around five years after RI had separated from RZB.