UPDATE 2-Hungarian MPs censure central bank over IMF dealings

Mon Feb 25, 2013 3:08pm GMT

* Parliamentary committee questions governor on data given to IMF

* Hearing based on audit office report; police also investigating

* With votes of ruling party, commitee says bank breached a law

* Central bank says obliged to give data to IMF under 2008 bailout (Releads, adds more comments, committee ruling)

By Krisztina Than and Sandor Peto

BUDAPEST, Feb 25 (Reuters) - Hungary's central bank "committed irregularities" and breached a law when it handed over data on commercial banks to the IMF, a parliamentary committee said on Monday after it questioned outgoing Governor Andras Simor.

Simor told the Hungarian parliament's budget committee that the bank did not overstep its authority when it handed over data on commercial banks to the IMF between 2008 and 2010.

The governor, whose six-year mandate ends on March 3, was questioned about an official report which said the central bank had acted unlawfully by giving the International Monetary Fund commercial banking data as part of Hungary's 2008 bailout by international lenders.

The parliamentary hearing was initiated by the ruling Fidesz party which has repeatedly criticised Simor over the bank's policies, saying it has not done enough to stimulate the recession-bound economy.

Simor is widely expected to be replaced as central bank chief by Economy Minister Gyorgy Matolcsy, the architect of policies that have been criticised by the IMF and European Union.

Although talks with the IMF have since collapsed, a row over government interference with the central bank has been among the main bones of contention between Prime Minister Viktor Orban and his international partners.

"Based on the hearing, the Committee found that the National Bank of Hungary committed irregularities in its operations," the committee said, adding that the bank breached the law on credit institutions. The ruling was passed by the committee's Fidesz lawmakers, with opposition MPs voting against it.

"By transferring the data that qualify as business secrets to the IMF the National Bank, which is responsible for financial stability under the central bank law ... posed a threat to the fulfilment of its tasks," Laszlo Domokos, chairman of the State Audit Office told the committee earlier.

Police have launched an investigation based on the report, which was carried out by the State Audit Office and released last week.

The central bank has repeatedly said it acted lawfully, although it has acknowledged that it had failed to obtain written consent from the commercial banks prior to the data transfer due to a procedural error.

It acquired all the permissions last year when the State Audit Office notified the bank about the shortcoming.

Simor told the committee that the data transfer about banks' financial positions was needed to show that commercial banks did not cut their Hungarian exposure during the crisis period after the IMF bailout.

He said the bank, which was one of the signatories of the 2008 deal signed under a previous Socialist government, was obliged to give data to the IMF under the 20 billion euro ($26 billion) bailout, taken to stem a deep market crisis.

"The IMF had asked for the data as it wanted to be convinced that the money which it had brought into the country did not flow out at the other end," Simor said.

Simor said the data transfer posed no risk to financial stability, on the contrary, it served the purpose of maintaining financial stability.

"It would have meant a risk (to financial stability) only if the IMF had used these data for speculation against Hungary. But why would it have been in the IMF's interest when it gives 20 billion euros to Hungary, to speculate against itself? It's absurd," Simor said.

Opposition Socialist MP Imre Szekeres, who voted against the ruling, said the allegations against the bank were political and the hearing proved that the bank had acted lawfully.

"This was a premeditated political act, which is not worthy of Hungarian parliament and the budget committee," he said. ($1 = 0.7598 euros) (Reporting by Krisztina Than/Sandor Peto; Editing by Ruth Pitchford and Patrick Graham)

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