June 14th, 2012

Central bank management at loggerheads with supervisory board over report blasting central bank management

National Bank of Hungary governor Andras Simor has informed House Speaker Laszlo Kover of a difference of opinion between the central bank management and its supervisory board over a report on the bank’s activities submitted to Parliament.

“The management of the NBH has a different opinion than the supervisory board with regard to some findings in the report. For this reason, I consider it important in the interest of balanced information that MPs sitting in Parliament get a report on the activities and the stand of the NBH too,” Mr Simor said.

He asked for that stand of the bank, attached to the letter, to be distributed among MPs.

The NBH’s communications department said the supervisory board’s annual report on the NBH, similar to the one submitted a year earlier, contained “many assertions that were not supported by facts” and could mislead MPs. “Thus the central bank informed House Speaker Laszlo Kover and MPs of the real facts and of the NBH’s stand this year too,” it added.

In the attachment to the letter, the NBH cited differences over statements in the supervisory report concerning an efficiency-boosting project, wage policy, procurements and a couple of other issues.

The supervisory board called the launch, implementation and apparent results of the efficiency-boosting project “questionable on several points”. But the NBH said the project was “exemplary in the public sector” and cut operating costs more than HUF 3bn in 2008-2011 while generating one-off additional costs of just HUF 541m.

The supervisory board said in the report that the wage rises for the NBH’s management were earlier of an “exaggerated scale” and exceeded the NBH’s own benchmarks.

The NBH said the staff compensation levels, including base salary, bonuses and premiums, were within a +/-10pc range of median market benchmarks.

The supervisory board’ report sent to Parliament found that the central bank’s overall business management was organised and disciplined in the period between July 2011 and June 2012, but said that wages, and the management’s wages in particular, remained too high.

The report also stated that, in spite of efforts at cost-efficiency and cost-cutting, not every element of the bank’s management is characterised by rationality.


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