TAX NEWS - June 2010

UniCredit Ghizzoni: Hungarian Bank Tax Will Be Partly Passed On

Hungary's second-largest lender, and the largest in Eastern Europe, UniCredit Group (UCG.MI), will pass on at least some of the burden of the new government's planned banking tax, UniCredit's Eastern Europe head said Thursday.

"Extra costs for the customers are inevitable, if this tax is introduced," UniCredit management board member Federico Ghizzoni said.

According to the plan presented earlier this week by Hungarian Prime Minister Victor Orban, the banking tax will be introduced this year, be temporary and cease within three years of its implementation. It is not yet clear what tax revenue the government is aiming for.

"We will try to absorb as much of these costs as we can through increased efficiency, but in general terms the banking sector will be less profitable, and the sector will be obliged to pass this on to its customers," Ghizzoni said. He, meanwhile, also assured that the bank will stay fully committed to the Hungarian market, regardless of the government's plan to introduce new and tougher regulation.

"We still need to hear the details of the governments new economic program, before we can say exactly what this will mean, but I expect it will make banking more expensive," Ghizzoni said.