PSZÁF head says banking tax should be viewed in context of other measures

Hungarian financial supervisory authority PSZAF should obtain the power to create regulations, Karoly Szasz, who was re-appointed as head of the financial market regulator on Thursday, told in an interview with MTI on Friday. The size of the planned banking tax should be viewed in the context of other planned government measures, he said.

It was too early to asess the full impact of a a HUF 187bn extraordinary financial sector tax, other government measures should also be taken into account when considering the size of the new tax as the economy-stimulating impact of other measures have a positive message for the financial sector, Mr Szasz said.

And if (a planned) National Asset Management Company buys out bad mortgages from banks that will allow banks to release reserves, which could improve their profitability, he added.

He also noted that the financial sector was also be expected to take part in social responsibility. Of course, the extent of the tax could be discussed, and the European practice should also be examined, he added.

Mr Szasz said that in principle he was against any rechannelling of PSZAF’s resources, when asked about an extraordinary HUF 5bn payment PSZAF should make into the central budget under a recent government decree.

“….PSZAF’s financial management… is not based on taxpayers money, but is supported by the financial sector. In this sense, it must be separated from the central budget”, he said.

He added, however, that the financial watchdog must take its share of social responsibility, and must contribute to lessen the fiscal deficit. Mr Szasz noted that the extra payment will not affect the supervisory body’s operation as PSZAF accumulated reserves in recent years.

Mr Szasz said that the issue of the power to create regulations must be raised again as supervisory bodies are regulatory authorities as well.

Speaking of the Financial Stability Council, Mr Szasz said that PSZAF’s subordinated role within the Council should be changed and PSZAF should an equal member of the Council which includes the head of PSZAF, the NBH governor and the Finance Minister. At the moment PSZAF must submit its quarterly risk reports to the Council in preliminary consultation, and the Council also gives its opinion on PSZAF’s annual report for parliament. PSZAF must also discuss its priority target areas with the Council.

Mr Szasz noted that a merger of PSZAF and the National Bank of Hungary is not on the agenda.