June, 25, 2010

The European Banking Federation called for “profound modification” of a planned Hungarian tax on financial institutions, saying the “discriminative” levy would push some lenders into the red and hamper economic growth.The Hungarian government aims to raise 187 billion forint ($813 million) from the tax on banks, insurers and leasing companies this year as it seeks to hit a budget deficit target approved by the International Monetary Fund, the European Union and the World Bank.

The tax, which equates to about $88 for every Hungarian, may end up being the most punitive for bankers in central Europe, relative to the size of the country.The cabinet of Prime Minister Viktor Orban still needs to reach agreement with commercial banks on the details of the tax, announced on June 8, a person close to the government said today. The parties are likely to agree soon, the person said.