The introduction of an extraordinary tax for banks — especially its size — will reduce banks’ capital and liquidity reserves as well as their ability to withstand shocks, National Bank of Hungary deputy-governor Julia Kiraly told MTI on Tuesday.
The tax — to generate HUF 187bn from financial sector companies in 2010 — was announced at the beginning of June, and a government decision on its form is expected by the end of the week.
The direct and indirect effects of the tax will change the behaviour of all economic players, Ms Kiraly said. One has to think through the effect the tax will have on the strategic decisions of the owners of Hungarian financial institutions, she added.
Owners of Hungarian banks will think through and reassess development plans as well as the distribution of financing for lending activities among their subsidiaries because of the tax, Ms Kiraly said. Foreign financing could be reduced or become more expensive, squeezing banks’ lending activities and slowing the economic recovery, she added.