CEE MARKETS 2-FHB shares jump on savings bank speculation

Reuters

* FHB gained 50 pct in 2 weeks, seen buying into Takarekbank * Serb central bank continues to sell dinar to weaken it By Sandor Peto BUDAPEST, Dec 30 (Reuters) - Hungary's FHB Bank surged 15 percent on Monday, extending recent gains on speculation it will bid for the government's stake in savings banks whose market share is expected to increase.

Its gains helped lift the Budapest stock index 1.2 percent, with Central European equity and currency markets otherwise mixed in slow trade ahead of the year-end.

Budapest said two weeks ago that it would sell its majority stake in Takarekbank, the umbrella group for Hungary's savings banks, which are seeking to at least double their corporate lending as part of a government drive to boost growth.

FHB has not said whether it will bid, but its share price has risen by about 50 percent since the announcement.

"Today's rise in FHB's price is probably again due to the same speculation," said Akos Kuti, analyst at brokerage Equilor in Budapest. "The question is whether it will be good or not: the price can plunge from here if there is disappointment." Although the Dec. 18 decree described an open, international tender, Prime Minister Viktor Orban has often said that half the banking sector should be in Hungarian ownership and foreign-owned banks have been cutting exposure to the country.

Central bank chief Gyorgy Matolcsy, an Orban ally, said this month that four big banks could quit Hungary in the next 18 months, with local lenders or Asian investors replacing them.

Banks in Hungary are among the most heavily taxed in Europe and foreign lenders have been hit with losses on Swiss franc and euro loans made to households that have struggled to service them as the forint has fallen since the 2008 global crisis.

Government schemes to help foreign currency loan holders have also dragged on shares in Hungary's biggest lender, OTP Bank. They firmed 1.5 percent to 4,120 forints on Monday, but were still near July's 2013 low of 3,950 forints.

The aid scheme is likely to remain a hot topic until elections in April or May, and could also hit the forint . It was bid at 296.43 to the euro at 1407 GMT, 0.1 percent weaker from Friday, while Poland's zloty was flat.

Both currencies have shed about 2 percent against the euro this year, after robust gains in 2012.

ONLY SERBIA INTERVENES In the region only Serbia's central bank intervened in the market on Monday, buying euros to weaken the dinar which it holds in tightly managed ranges to keep investor confidence ahead of loan talks due to start with the IMF in February.

The bank has been buying euros in the past two weeks to offset supply from companies which needed to sell euros to pay their taxes in dinars.

The dinar was steady at 114.51 to the euro.

Polish state bank BGK sold a higher than usual amount of euros in the market this month as the flow of revenues from the European Union picked up.

The Polish Finance Ministry said there was no need for zloty-strengthening market intervention as the country's debt was below the legal threshold of 55 percent of GDP. A stronger zloty cuts that ratio as part of debt is in foreign currencies.

A stronger forint would also make Hungary's year-end debt level lower, but market participants said forint turnover remained low and there was no sign that the central bank would try to strengthen the currency.

"Our calculations show that at forint levels at 300 the debt level would already decline," said Raiffeisen analyst Adam Keszeg.

Hungary's centre-right government has pledged to cut its debt, which is near 80 percent of output - the highest in the region. The central bank said this month that at the forint's end-2012 exchange rate of around 290, the debt would fall slightly to 78.7 percent of GDP by the end of 2013.

While Hungary is trying to at least partially reverse its 1990s privatisations, neighbouring Slovenia plans to sell part of its big state sector to help avert an international bailout.

Slovenian white goods maker Gorenje raised much less than planned in its secondary listing in Warsaw this month, however, and the shares fell 9 percent at their debut on Monday. Warsaw's main equity index was flat.

CEE MARKETS SNAPSHOT AT 1507 CET ************************** CURRENCIES ************************ Latest Previous Daily Change bid close change in 2013 Czech crown 27.415 27.427 +0.04% -8.63% Hungarian forint 296.460 296.050 -0.14% -1.86% Polish zloty 4.149 4.147 -0.03% -1.80% Romanian leu 4.472 4.456 -0.35% -0.64% Croatian kuna 7.624 7.633 +0.11% -0.96% Serbian dinar 114.510 114.500 -0.01% -1.93% Note: daily change calculated from previous close at 1700 GMT **************************** STOCKS ************************** Latest Previous Daily Change close change in 2013 Prague 988.57 986.91 +0.17% -4.83% Budapest 18558.59 18334.09 +1.22% +2.12% Warsaw 2400.79 2404.35 -0.15% -7.05% Bucharest 6486.64 6477.94 +0.13% +25.96% ***************************** BONDS ************************** Yield Yield Spread Daily (bid) change vs Bund change in Czech Republic spread 2-year 0.264 +0.087 +4bps +10bps 5-year 1.119 +0.083 +18bps +10bps 10-year 2.534 -0.004 +59bps 0bps Hungary 3-year 4.030 +0.040 +364bps +7bps 5-year 4.650 +0.040 +371bps +6bps 10-year 5.630 +0.020 +368bps +2bps ******************* FORWARD RATE AGREEMENTS ****************** 3x6 6x9 9x12 3M interbank Czech Rep 0.400 0.360 0.380 0.38 Hungary 2.870 2.930 3.060 2.99 Poland 2.730 2.730 2.775 2.71 Note: FRA quotes are for ask prices **************************************************************

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