By Margit Feher
BUDAPEST--The National Bank of Hungary Wednesday rejected a
claim from the State Audit Office that it had unlawfully supplied
bank data to the International Monetary Fund that qualified as a
business secret, in the latest phase of the central bank's struggle
to retain its independence.
The central bank aimed to avoid financial stability risks by
providing bank data to the IMF, the bank said. The goal was to keep
the money the country received from the IMF in the form of a loan
within the country's borders while there remained a risk that the
foreign parent banks of Hungary's retail banks might transfer the
funds back home, it said in a press release.
Except for OTP Bank Nyrt. (OTPIY), Hungary's largest bank by
market share, all major Hungarian retail banks are owned by a
foreign parent bank.
The central bank has been at loggerheads with Prime Minister
Viktor Orban's government for over two years and perceived threats
to its independence have also brought clashes between Hungary, the
European Commission and the European Central Bank--who say a key
prerequisite for a credible monetary policy is the autonomy of the
central bank.
The State Audit Office conducted a probe into the central bank's
operation over an 18-month period that ended June 30, 2012.
The central bank exceeded its scope of authority when it
supplied data to the IMF regarding Hungary's seven biggest banks,
the State Audit Office said earlier Wednesday. It also said the
central bank's operation over that period was basically in line
with regulations but listed some additional faults it found in
several areas, including the handling of documents.
Hungary was the first European Union country to turn to the IMF
for a bailout during the global financial crisis in 2008 and it
received a standby credit of about 16 billion euros ($21.38
billion) from the EU/IMF. It has been in negotiations with the
international institutions for further support for more than a
year, with no results.
"The central bank's operation is in line with the legal
requirements. Contrary to the State Audit Office's claims, the
central bank didn't exceed its scope of authority when providing
data to the IMF in relation to the loan agreement, and its document
handling system meets the content of the regulations," National
Bank of Hungary said in a release.
The bank acknowledged that it had failed to obtain prior written
agreement from the banks on supplying their data to the IMF but has
remedied that by launching an investigation to find those
responsible and has received the written consent from the banks in
the meantime.
The six-year mandate of the central bank Governor Andras Simor
will expire March 3 and financial markets expect Mr. Orban to
appoint a new governor who will agree to cooperate closely with the
government.
"Taken as a whole, the State Audit Office's report fails to give
a realistic picture of Hungary's central bank, and the quality of
the report is not in the line with the State Audit Office's basic
values," the central bank said.
"The State Audit Office's attitude and approach is suited to
undermine trust in an impartial audit," it added.
Write to Margit Feher at margit.feher@dowjones.com
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