“I am being swept away by events.” – László András Borbély, deputy CEO, State Debt Management Company (ÁKK)
Nine days after István Töröcskei (pictured) tendered his resignation as state secretary and CEO of the State Debt Management Company (ÁKK), it is still not clear whether his boss, Minister for National Economy Mihály Varga, intends to accept it.
A close business associate of Fidesz oligarch Lájos Simicska, Töröcskei and his wife are the majority (51 percent) owners of the Széchenyi Bank whose operations were suspended by the National Bank of Hungary on Friday, December 5–the same day Varga called an extraordinary press conference to announce that the government had signed a pre-contract to acquire the Budapest Bank in an obvious attempt to distract the public from that day’s real story, which was that the National Bank of Hungary had known for some time the bank was in trouble and yet had failed to act in a timely manner to prevent its collapse.
The Széchenyi Bank is 49 percent owned by the state of Hungary, for which the government paid HUF 3 billion in June 2013. The bank’s 1600 depositors reportedly lost some HUF 7.5 billion (USD 30 million) in uninsured deposits. (Depositors are automatically insured up to HUF 30 million (USD 125,000).)
István Töröcskei has served as both a state secretary and CEO of ÁKK since 2010. The day after Töröcskei tendered his resignation, Ministry for National Economy State Secretary Gábor Orbán announced that the bank’s failure did not automatically disqualify Töröcskei from continuing to manage Hungary’s national debt.
At the first of two joint press conference held yesterday, by Prime Minister Viktor Orbán and central bank governor György Matolcsy, Orbán announced the creation of a special fund to help uninsured depositors into which the government itself would deposit an amount proportionate to its ownership interest in the bank to compensate depositors for their losses, i.e. HUF 3.7 billion (USD 15 million).
Matolcsy used the occasion of the joint press conference to announce that the Hungarian Trade Bank (MKB), which the government acquired in July of this year for a reported EUR 55 million, was in serious trouble but that the central bank intended to stand behind it “with its entire balance sheet”. Visibly distressed by these developments, Viktor Orbán announced that the government was not suited to run banks and should only own commercial banks for the purpose of “reorganizing them”. It is not known at this time how much the “reorganization” of the MKB will end up costing Hungarian taxpayers.
At a second joint press conference held later in the day, deputy state secretary for finance László Balogh and ÁKK deputy CEO László András Borbély presented the plan for financing Hungary’s state debt in 2015. In response to questions about the fate of his superior, Borbély answered “I am being swept away by events”.
Deputy state secretary Balogh left the press conference without taking any questions. Neither Minister for National Economy Varga nor state secretary Orbán attended.
If yesterday’s joint press conferences were intended to instill confidence in the Hungarian banking system and the country’s ability to manage its national debt, they appear to have failed. In their wake, the forint fell to a new five-year low against the US dollar.