Market Spotlight - Hungary
The Hungarian banking sector enjoyed a banner year in 2019, but still faces challenges. Legislative changes are creating more aggressive competition between banks, which in turn are cutting fees and demanding flexible financing structures in order to survive. Although some banks are unwilling to take part in these practices, one thing is certain: All banks must adapt to the new regulatory environment. I’ve outlined some of the major challenges that Hungarian banks face in the near future.
On December 27, 2019, several amendments made to the Hungarian capital markets act by the Hungarian Parliament to adhere to the relevant rules of the European Union be-came effective, also making it easier for Hungarian companies to issue bonds under the Bond Funding for Growth Scheme (BGS) by introducing more lenient information and publication rules for issuances.
On September 20 2019, CEE Legal Matters reported that BLS had advised Pannonia Bio Zrt. – a company operating a biorefinery in Tolna County, Hungary, that is the largest ethanol plant in Europe – and that CMS Hungary had advised OTP Bank Plc. on Pannonia Bio’s issuance of the first Hungarian forint bond in line with the Central Bank of Hungary’s Bond Funding for Growth Scheme.
Sounds frightening, huh? When I first encountered this expression a couple of years ago, I thought it was one of those buzzwords that had been created by accountants or other financial wizards to tackle invasively curious tax administration people. “Bottomline” also sounded familiar: that is the very last figure in your financial statements; the one that interests you the most.
“To be honest, I think the government handled the crisis as well as possible," says Levente Csengery, Partner at KCG Partners. “The COVID-19 regulations do exactly what they’re supposed to – protect public health and keep us all alive, and they’re working.“ At the time of writing, Hungary has had 3535 confirmed cases (and 460 deaths) from the new coronavirus.
Just a few days after the entry into force of the special tax on retailers (effective as of 1 May 2020), which may amount to as much as 2.5% of their annual turnover, the Hungarian Government further tightened the rules on the distribution of food products by significantly restricting traders' freedom to negotiate purchase prices.
The Hungarian Competition Authority (HCA) has imposed a record fine on Booking.com for committing unfair commercial practices by misleadingly advertising certain hotel rooms with "free cancellation", as well as for pressure selling. The authority has also banned the company from applying these practices as of 2021.
The coronavirus epidemic has shown that implementing appropriate occupational safety and health measures and providing adequate conditions are essential in all sectors regardless of the activity. After the coronavirus outbreak, the European Agency for Safety and Health at Work (EU-OSHA) had published a guidance for the workplace. Now, a couple of month later, at the end of April 2020, the EU-OSHA issued guidance on coming back to work. The goal of these non-binding guidelines is to help employers and workers to stay safe and healthy in a working environment that has been changed significantly by the COVID-19 pandemic.
At the end of April 2020, the Hungarian Government submitted to the Parliament a bill on the termination of the undivided joint ownership on agricultural lands and the clarification of the data of the rightholders of properties deemed agricultural land in the land registry, aiming at the establishment of a clear and transparent land ownership structure.
Balazs Sahin-Toth, Counsel in the Budapest office of Allen & Overy, working pro bono in conjunction with Peter Gardos from Hungary's Gardos Mosonyi Tomori Law Firm and Hungarian solo practitioners Adel Kegye and Eleonora Hernadi, has persuaded the Hungarian Supreme Court to uphold the lower court's decision that the Hungarian segregation of Roma students between 2003 and 2017 provided a lower level of education.