Bank association balks at Quaestor compensation
The Hungarian Banking Association today expressed concerns over a bill to establish a top-up fund, which would include a contribution from banks, to compensate investors of failed brokerage Quaestor, Hungarian news agency MTI reported.
A bill was submitted to the Hungarian parliament on Friday by Fidesz Caucus Leader Antal Rogán that would raise the insured threshold of the Investor Protection Fund (Beva) from €20,000 to €100,000. Hungary’s National Economy Ministry and the Hungarian Banking Association began consulting on the issue on Friday and continued yesterday.
Late yesterday, the National Economy Ministry said the Hungarian Banking Association did not exclude the establishment of the top-up fund but did express concerns over the legislation.
Quaestor brokerage filed for bankruptcy on March 9. According to allegations by officials, the brokerage received permission from the Hungarian National Bank to issue HUF 70 billion in corporate bonds, but wrongly issued an additional HUF 150 bln in bonds that were not sanctioned.
Levente Kovács, the chief secretary of the association, said that the body did not welcome an earlier decision by Beva to compensate investors for the unsanctioned bonds and failed to see the "professional justification" for raising the compensation threshold.
"We understand that fraudsters must be taken into custody, but we donʼt take responsibility for the acts of those fraudster brokers," Kovács said, adding that "we also agree that the banking sector is now, also, overburdened."
Earlier, OTP Bank chief Sándor Csányi said it would be “unjustified” to force financial market players in Hungary to compensate investors for unsanctioned bonds issued by the now insolvent Quaestor boutique brokerage.
On Friday, Hungary’s Prime Minister Viktor Orbán insisted that “those who hurt clients need to be punished” and noted that the Fidesz government inherited a financial system that is in a “very bad condition.”
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