7Days, 2004. december 20

7/28/2019 7Days, 2004. december 20.

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: [email protected]

14 December 2004Business Eximbanks sign cooperation agreement

GVH fines clubs for setting pricesMOL to reduce pump prices tomorrowHealth center opens in KomáromNatural gas prices show slight rise

Luxuries popular this ChristmasWinemakers protest fraudulent practicesChristmas sales tax checks result in finesRules force lenders to publish THM for all loansIsland Pacific expands to HungaryCIB raises capital to issue employee sharesHealth insurance covers creature comfortsMusashi content with 2004Hungary buys Gripen missiles from U.S. Agrospecial plans Ft 1.5 billion biogas planteconet.hu sets up company to auction art onlineMunicipality buys back Pécs water stake

Economics Hungary lagging on Maastricht measuresBelgium and Germany to store Hungarian crops

Politics Court tightens rules on drug abuseBishops urge politicians to grant citizenship

Domestic Catholic schools brace for protestCo’s integrate Budapest transport

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7/28/2019 7Days, 2004. december 20.



15 December 2004Business Auchan falls short of target

Ganz Transelektro lands order from MVMLinamar hopes to recoup lossesParmalat to pay for use of name

Poles acquire fruit juice manufacturer MOL stock can start Warsaw tradingFlextronics cuts workforceSynergon gets Ft 400 mln contractPorsche Hungária car sales up 5.5% in 2004FHB voting preference shareholders sign agreement Austrian bank opens Budapest officeMagyar Sugar co. exceeds EU quota Avaya uses Budapest as EMEA center Délhús enlarges Alsómocsolád plantStock exchange awards

Club Aliga sale stallsPower utility E.ON Edasz to be delisted from BÉTCourt nullifies referendum result

Economics Inflation figures lower than expectedPolitics Parliament adopts amendments to central bank law

Parliament probes chief prosecutor’s assetsDomestic Agreement on 6% public sector wage rise signed

Government mulls tightened security billPolice make bumper drug haulOne-third of 16-year-olds smoke regularly

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16 December 2004Business Gloomy forecast for residential real estate

Styl’s worth divesMatáv votes for structural changesEHF creditors to be repaid

Revenue at GTS-Datanet jumpsDámtej on the moveGround broken on RiverLoft project Audi expects sales of Euro 4 billionOTP to boost certain interest ratesPSzÁF approves Credigen’s capital reduct

Economics Electricity prices set for hikeGrowth expected to slowElectricity prices set for hikeGrowth expected to slowSocial security deficit some Ft 406 bln

Oct industrial output up 8.4% yr/yr 2 mln tons of cereals for interventionBrownfield investment for MarcaliHungary to spend Ft 10 bln on tourismBorrowing costs down on bills saleM&A activity flat in Hungary this yr EBRD provides Euro 10 mln credit line

Politics „Media restriction not unconstitutional”Domestic Big firms set up homeless charity

Yad Vashem recognizes Hungarian diva ÁSz faults Managed Patient Care

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17 December 2004Business FreeSoft lands big Vodafone contract

Ericsson gets T-Mobile 3G dealRoyal-Bau gets immunity for evidenceItalians barred from using Tokaj nameÁPV won't give Malév Ft 3 billion

Viasat may terminate broadcastsFotex chief remains richest HungarianPick fined Ft 30 millionK&H Bank gets Euro 250 mln loanMOL announces in Polish pressAPEH may auction off Excel EuropaKingspan building Euro 11 mln factoryNew Peugeot salon at Budaors

Economics M'way stickers to rise 15% from JanReal wages slip 0.4% yr/yr in Jan-Oct Járai sees legal challenge to bank lawBKV/services price rise decidedNo significant drug price hike expected

FinMin makes call for lower ratesCigarette price war could hurt budMobile phone usage rising

Politics MEPs condemn Vojvodina ethnic violenceDomestic Bp-Rijeka m'way to be finished by '09

Court judges fall to quorum limitEnvironmental agencies face restructuring

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20 December 2004Business ÁPV to give Volán Ft 6 bln injection

Ganz wins new Kuwaiti contractSykes gets Samsung tender Plans are begun for new shop. center Malév faces structural changes

Crystal factory halts productionTaverna to invest Ft 2 bln in dev'mntPaks undergoes major overhaulMOL shares to float in Warsaw on WedGVH approves Forlev's Konzum buyoutMTV to borrow Ft 4 blnOTP, MOL drive pre-Christmas rally

Economics P'ment to vote on budget today"Economy would have collapsed without EU"M5 technical survey tomorrowGames market winningTop tax payers must go onlineConstruction industry output up in Oct

MOL to raise diesel price todayPolitics PM and Pope discuss new EuropeDomestic Nagy wins super featherweight title

Citizen looses 1930's bank deposit caseUkraine border wait up to 20 hrs

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14 December 2004BusinessEximbanks sign cooperation agreementHungary’s Export-Import Bank (Eximbank) Rt and its Russian counterpart Rosseximbank, along with Hungarianexport insurer MEHIB Rt, have signed a framework agreement to jointly support or finance projects in Asia, South

America and Southern Europe. The agreement will help Hungarian and Russian businesses realize jointinvestments in third countries, Economics and Transport State Secretary István Major said. The cooperation couldbe used to fund joint projects of Hungarian and Russian companies in important emerging economies such asChina or India, Frigyes Banki, CEO of the Hungarian Eximbank, said. Bilateral economic ties have started toflourish in the past two or three years, MEHIB CEO Tibor Szakács said. (Econews; Vg 5, MH 11)

GVH fines clubs for setting pricesThe Competition Office (GVH) has fined two hunting associations for illegal price setting. The associations’members agreed to set a minimum price for game killed by hunters. Hunters in Hungary must pay a price, set bythe company organizing the hunt, for each animal they kill. GVH fined the 49-member Gamekeeping Products andServices Council Ft 150 million, and the Budapest Chamber of Agriculture, which has 15 members, Ft 17m. GVHstarted investigating the associations in July of 2003. Hunting generates annual revenue of Ft 8 billion in Hungary.(Econews; Nv 5, Vg 6, MH 13, Nb 16)

MOL to reduce pump prices tomorrowThe oil and gas company MOL Rt, the country’s leading fuel distributor, will reduce retail petrol prices by Ft 6/litreand the retail price of diesel by Ft 2/litre on December 15, a MOL spokesman said yesterday. MOL said the newprice would be Ft 231.5/litre for 95-octane unleaded and Ft 227/litre for diesel. Explaining the measure, MOL citeda decline in petrol and diesel prices quoted on international markets over the past week. (MTI; MH 3, Nv 5, Vg 5)

Health center opens in KomáromHealth center operator Medicina Kft has recently opened its second occupational health center, this one located inthe Komárom industrial park. The new institution will provide health care services for 8000 workers of 50companies. Medicina CEO Attila Olajos explained that 6 doctor’s surgeries have been created in the complex, towhich will later be added a dermatology, ophthalmology, internal medicine and a dentist’s surgery. The number of employees in Komárom industrial park is estimated to be 12 000 by the end of next year, and may reach 15thousand by 2007. The Ft 250 million investment is expected to return in 10-15 years. The first occupationalhealth center was constructed in Ózd in 1998, and the next one is to open in Miskolc industrial park. (Vg12) E.C.

Natural gas prices show slight riseThe increase in natural gas prices is to be no more than 11% for companies as opposed to the threatened 18-20% increase, according to Népszabadság information. The increase for households is in the 4.5-8% range:households consuming less than 1500 cubic meters of natural gas would be burdened with an increase of lessthan 5%; in the 1500-3000 cubic meter range the rise is around 6.5%, and in the highest category, over 3000cubic meters, prices increase by 8%. MOL Rt has contributed Ft 60 billion to the budget for compensation tohouseholds, and its contribution in 2005 is set to exceed Ft 50 billion. (Nb 15) E.C.

Luxuries popular this ChristmasLuxury goods are selling well this winter. The top hits of the season are home entertainment sets, DVD players,DVD writers, and LCD and plasma TVs. Five years ago, a 42-inch plasma TV cost Ft 3 million, whereas now onecan be had for only Ft 500 thousand. The fur coat market is also purring over nicely this year, with top fursincluding velvet mink, chinchilla and the lightest and most expensive: the sable, which can cost as much as a

Mercedes. Jewelry and watches of any style sell well, with jewelry ranging from Ft 30 thousand to Ft 11 million,whereas watches vary from Ft 20 thousand to Ft 6.5 million. (Vg 10) E.C.

Winemakers protest fraudulent practicesSeventy winemakers will file a complaint with EU agriculture authorities to demand stricter quality control inHungary after appeals to the ministry and national regulatory bodies yielded no results, according to Bence Dula,the administrator of the Eger wine region. The group claims that the market has been inundated with low qualitywines that fall short of quality standards defined in their licenses. Properly certified wines that come with a receiptare often rejected by retailers and restaurateurs in favor of substandard products, according to Dula. (Nv 5) P.P.

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Christmas sales tax checks result in finesIn a spot check last weekend 47% of nearly 1,000 points of sale checked randomly by tax inspectors failed to givea receipt as required by law, Ákos Ecsedi, a senior executive with the State Tax Office (Apeh), said. Theirregularities resulted in Ft 36 million of fines in total, averaging Ft 73,000 per sales point. As many of theoffenders were recidivists, Apeh closed down 46 stores. The inspectors were active day and night, visiting notonly permanent retail facilities but also Christmas sale stalls, car parks, theaters and restaurants. The tax office is

planning more raids before the end of the year. (Nv 3) P.P.Rules force lenders to publish THM for all loansHungary’s lenders will have to publish a „total cost of borrowing” indicator, known by the acronym „THM” inHungarian, for more loans and use a uniform method of calculations spelled out in the law from the start of nextyear. Lenders will also have to display the THM prominently on all advertisements for loans. The changes weredecided on at a cabinet meeting on December 2. Currently, lenders do not have to publish the rate for home loansor foreign-currency denominated loans. Under the new legislation, the THM will have to contain all of the chargesa lender bank makes for a loan. The THM must also include specified charges payable to a third party in relationto the loan such as appraisers’ fees, but does not have to contain the notary fee or the insurance premium.(Econews)

Island Pacific expands to HungaryIsland Pacific announced today that it is continuing its expansion in Eastern Europe by signing an agreement with

ComBase Computer Technologies Service (ComBase) to cover Hungary as a Retail Pro Business Partner.„Eastern Europe is a fast growing corner of the retail market,” Soren Hebsgaard, responsible for Retail Pro®products in EMEA, explained. „We see more and more retailers going to the former Eastern block, and it is our mission to be there to help and support them right where they see the opportunities of the future. After establishing ourselves in Russia and Poland, Hungary was a natural choice,” he said. (AMEX:IPI)

CIB raises capital to issue employee sharesThe Court of Registry has registered a Ft 2,223-billion raise in capital by CIB Bank Rt. The raise came out of netassets and was used to issue a combined 2,222,639 B-series shares to the bank’s employees, including its CEOsand two board members. The shares were distributed free of charge. The board of directors approved raising CIBBank’s registered capital to Ft 25,723 billion on Nov. 30. CIB Bank had consolidated net assets of Ft 86.329 billionat the end of June, according to unaudited IFRS figures. CIB Lízing Rt, CIB Bank’s leasing arm, is also issuing B-series shares to its employees through a Ft 200.12 million capital raise. (Econews; Vg 13)

Health insurance covers creature comfortsING Insurance Rt has recently launched a new premium health insurance scheme called Vitalitás that providesclients with hotel-level health care services. For a monthly contribution of Ft 3,500 and Ft 9,400 - depending onage and sex - patients are laid up in private rooms equipped with a private bathroom, fridge, TV, telephone andeven internet access. The service is also special in that, unlike in many state hospitals, gratuities are frownedupon. (NG 7) S.F.

Musashi content with 2004Japanese-owned car parts manufacturer Musashi Hungary Kft said it had a successful year in 2004 that sawmajor upgrades at the company’s plant in Ercsi, south of Budapest. Musashi expects its sales revenue to totalover Euro 27 million after it completed an investment of Euro 11 million at the factory in August to boost its annual joint production capacity to 500,000. The plant also supplies 1.1 million camshafts for Fiat and Daimler and other automotive parts for Audi, Rover, Land Rover and General Motors. (Nv 5) P.P.

Hungary buys Gripen missiles from U.S.Having decided to buy Raytheon missiles for its Gripen fighter aircraft, Hungary has signed a contract with theU.S. government for the purchase. The purchase is part of a gross Ft 27.3 billion (Euro 1.10 billion) worth of weaponry Hungary will buy for the aircraft Chief political advisor to the Defense Minister Nándor Hollósi said thatthe contract for Advanced Medium-Range Air to Air Missiles (AMRAAM) for Hungary’s 14 Gripen JAS32 fighterswas signed on Friday, two days after the government approved the purchase. The U.S. administration will buy themissiles from Raytheon, a big defense contractor, and resell them to Hungary. Under U.S. laws on arms trading,only the government may sell the missiles. (Econews; Vg 9)

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Agrospecial plans Ft 1.5 billion biogas plant Agrospecial Kft, a state-owned agribusiness which employs convicts, plans to build a Ft 1.5 billion biogas power plant in Pálhalma (central Hungary) in March of next year. The plant will burn methane, the byproduct of 90,000tons of manure from the company’s 700 cattle and 16,000 pigs, to generate electricity for as many as 5,000homes. Because of the plant, Agrospecial’s carbon dioxide emissions will be reduced by 34,000 tons a year, Agrospecial CEO Tamás Kovács said. The biogas plant will start a three-month test run in October 2005.

Agrospecial will finance the project with its own resources, grants and loans. The company expects to recoup itsinvestment in seven years. (Econews)

econet.hu sets up company to auction art onlineIT company econet.hu Rt has set up a company which will specialize in the online sale and auction of fine art.Through the company, called Artigó Mutárgykereskedelmi, econet.hu aims to stake out a claim on this unexploitedmarket in Hungary. In H1 this year, econet.hu sales were up 5.2% yr/yr at Ft 130.8 million. The company whichhad Ft 33.4 million operating losses in H1 last year, turned out a slight operating profit in H1 this year. (Econews)

Municipality buys back Pécs water stakeThe municipality of Pécs, southern Hungary, said it would buy back its 48.05% stake in the local water companyPécsi Vízmu (PV) Rt it had sold to Suez S.A, a French investor in 1995. Suez, which has affiliations in over ahundred countries globally, has made upgrades worth billions in the past 9 years and viewed its Pécs investmentas a springboard for its Hungarian expansion. With a staff of 400, PV made net profit of Ft 286 million on

revenues of Ft 4.5 billion in 2003, while this year it expects earnings in excess of Ft 300 million. (NG 1) S.F.EconomicsHungary lagging on Maastricht measuresHungary is the last but one of the new EU member states to achieve the Maastricht convergence criteria. Theconvergence index ranging 0-10 developed by ICEG research institute and daily paper Világgazdaság awards 6.1points to Hungary, followed by only Estonia. The lag is attributed to the high inflation rate, the budget deficit, andthe relatively slow growth rate. The convergence index unifies and evaluates 10 macro-economic criteria thatshow the current stage of a country’s economy. The list is headed by the Czech Republic and Slovakia. (Vg 4)E.C.

Belgium and Germany to store Hungarian cropsThe Hungarian Development Bank (MFB) Rt has earmarked Ft 40 billion to finance the construction of cropstorage silos and to create Euro-conform animal farms. The problem of crop storage came to existence whenfarmers produced a record amount, 16-17 million tons of crop this year. Germany and Belgium have alreadyexpressed a preliminary intention to store 500 and 300 million tons of Hungarian crops respectively. The Ministryof Agriculture has developed a new agro-credit program to subsidize the construction of at least 10 000 ton-capacity silos located preferably on major export routes or other transportation lines. (Vg 6) E.C.

PoliticsCourt tightens rules on drug abuseThe Constitutional Court yesterday rejected pleas for more liberal rules on drug abuse and abolished passages inthe Criminal Code that essentially decriminalized the use of recreational drugs. The „right to narcotic ecstasy doesnot exist,” ruled the Court, adding that a ban on drugs without sanctions was not an efficient way to fight drugabuse. The judges argued that drug dealers threatened social peace and public safety. The Court abolished thephrase „small quantities of drugs”, which is used in the Criminal Code to distinguish between severe and lesssevere cases of drug abuse. (MTI; MH 1, Nv 1, Nb 6)

Hungary, Serbia set up joint committee on minorities

Hungary and Serbia-Montenegro reached an agreement on setting up an inter-governmental joint committee onprotecting minority rights. Vilmos Szabó, Parliamentary State Secretary at the Prime Minister’s Office, and RasimLjajic, Serbian Minister of National Minorities, approved the text of a relevant protocol during their talks inBudapest yesterday. The protocol declares prioritizes the preservation of the national identity of ethnic Serbs inHungary and ethnic Hungarians in Serbia. It recommends the two sides step up cooperation in the fields of education, culture and science. The protocol will be signed in Subotica next January and the joint committee willhold its next session in Belgrade in late 2005. (MTI)

Bishops urge politicians to grant citizenshipThe Hungarian Catholic Bishops’ Conference called on parliament and all Hungarian political officials yesterday tomove quickly to set up the legal conditions allowing ethnic Hungarians in neighboring countries to becomeHungarian citizens. A statement issued by the conference called on officials to „grant citizenship to Hungarian

brethren who live outside of Hungary’s borders for one reason or another.” (MTI; MH 6)

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DomesticCatholic schools brace for protestNew tensions between the government and churches flared up yesterday as the education ministry accusedCatholic leaders of meddling in politics by approving a protest organized by Catholic schools over educationsubsidies. Education Minister Bálint Magyar said „It is unconstitutional and unlawful to ask minor age children,even with parental approval, to attend such demonstrations,” Magyar said, adding that such methods harked backto the 1950s when pupils were forced to attend mass demonstrations against imperialist powers. Thedemonstration planned for today urges equal state subsidies for religious and secular schools. (MTI; Nv 4, Nb 6)

Co’s integrate Budapest transport After a decade of unsuccessful talks, the management of local public transport company BKV Rt, long-distancebus service operator Volán Rt and national railroad company MÁV Rt have reached an agreement on anintegrated public transport system in Budapest and its satellite towns to benefit commuters. The Economy andTransport Ministry has granted Ft 500 million funding from its 2005 budget for the Budapest Transport Alliance,which will start operation in September. The government has also agreed to underwrite a Ft 15 billion loan for BKV and will consider forgoing the latter’s Ft 45 billion debt, which is expected to swell to Ft 60 billion by the endof next year. In other news, BKV decided to outsource the operation of Budapest’s traffic lights for increasedenergy efficiency and safety. (Nv 4, 16) P.P.

StockwatchBUX index: BUX Close: 14287.64 Change: +126.07 (+0.89%)Stock Closing price Daily change (%) Average price VolumeMOL 12,290 0.4 12,161 221,773Matáv 835 1.6 827 1,592,468OTP 5,449 2.2 5,356 326,149Richter 21,515 -1.6 21,639 98,360Egis 10,650 -0.9 10,724 14,135 Antenna 3,840 -0.3 3,863 10,666TVK 5,195 -2 5,183 909Rába 695 0.7 704 26,014Budapest Stock Exchange, Dec 14Exchange

In forints, Dec 14, 2004FIXED MIDDLE RATEEUR 1 247,34USD 1 186,01GBP 1 357,03CAD 1 152,26CHF 1 161,15JPY 100 177,56CZK 1 8,08PLN 1 58,88

Weather Tomorrow: p/cloudy

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Low -1°C (31°F)

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15 December 2004BusinessAuchan falls short of targetFrench-run retail chain Auchan Magyarország Kft’s turnover this year will fall somewhat short of its Ft 200 billiontarget, CEO Jean Paul Filliat said at a news conference yesterday, adding that delayed plans to add a tram line

and service road to its store in Albertfalva in Dist. 11 cost the company hundreds of millions in lost revenues.Filliat also said next year Auchan will move on to open another hypermarket in Solymár, outside Budapest, alongwith several discount filling stations. Auchan set up in Hungary in 1995 and currently operates 9 hypermarkets,mainly in the Budapest area. (Vg 1, NG 5) S.F.

Ganz Transelektro lands order from MVMGanz Transelektro Kft, a maker of heavy electrical equipment, has received an order from the HungarianElectricity Works (MVM) Rt to supply a 250MVA transformer in 2005. Ganz Transelektro has already suppliedMVM with two transformers of this type this year for a price of about Ft 700 million. Ganz Transelektro, which isowned by private Hungarian investors and the Hungarian Development Bank (MFB) Rt, had losses on turnover of Ft 12.2 billion in 2003. This year the company expects to have sales of Ft 16 billion. (Econews)

Linamar hopes to recoup losses Auto parts maker Linamar Hungary Rt, formerly known as Mezogép, said it was hoping to recoup most of thelosses by the end of the year it suffered when General Motors Corp. halted its Ft 3 billion order in late July thisyear - the order accounted for 15% of Linamar’s total sales last year. As a result, the Orosháza-based auto andmachinery company is projected to end this year with revenues of Ft 20 billion, down only a modest 2% from2003. At the same time, Linamar’s operating profit is likely to come in at a mere half of last year’s, while annualnet earnings are estimated at Ft 500 million-Ft 600 million up over last year’s Ft 300 million, but below the Ft 600million-Ft 700 million previous forecast. (Vg 19) S.F.

Parmalat to pay for use of nameDairy producer Parmalat Rt will sign an agreement on the usage of the brand name with Italian parent companyParmalat S.p.A in January as the two have recently concluded negotiations, announced Ferenc Somogyi, theHungarian company’s liquidator. According to a previous plan Parmalat would pay 1.5-2% of its turnover for usingthe Parmalat name and only 1% if the turnover did not reach the 2003 net amount in the future. Parmalat Rt’s2004 losses are Ft 600 million including liquidation costs. The company aims to process 200,000 liters of milk aday in 2005. (NG 1) R.G.

Poles acquire fruit juice manufacturer The Polish Maspex Wadowice Group has acquired Olympos-Top Kft, Hungary’s second largest manufacturer anddistributor of fruit juice products. Olympos-Top owns a manufacturing plant and logistics base in Nyárlorinc,central Hungary, in addition to the proprietary rights to the brands Olympos, Top-Joy and Fiona. The companyexports its products to 20 countries, mostly within the CEE region. Its Olympos lemon juice is market leader inHungary. Maspex has been present in Hungary for 11 years through a subsidiary, Maspex Hungary Kft, whosebrands include La Festa and Coffeeta instant coffees. (Nv 5) P.P.

MOL stock can start Warsaw tradingOil and gas company MOL Rt, said it expects its stock to start trading on the Warsaw Stock Exchange this monthafter clearance by Poland’s market regulator. Poland’s Securities and Exchange Commission granted MOL thepublic-company status required for a listing in Warsaw, central Europe’s biggest bourse, MOL said in an e-mailedstatement. The approval is pending the publication of the Hungarian company’s investor prospectus in Polish.

MOL, which abandoned talks this year about a possible merger with Poland’s PKN Orlen SA, applied for thelisting in September to increase the stock’s liquidity and to attract Polish investors. (Bloomberg; Nv 5, MH 11, Vg17)

Flextronics cuts workforceSeveral hundred staff recruited by temporary agencies are due to be laid off at Flextronics International Kft’sZalaegerszeg plant in the coming months, Péter Papp, human resources manager of Flextronics ZalaegerszegIndustrial Park said adding that downsizing will not affect the company’s core employees. Temporary workersaccount for 15% of Flextronics’ 10,000 strong workforce. (Vg 13) S.F.

Synergon gets Ft 400 mln contractIT company Synergon Rt has signed a Ft 400 million contract to further develop the IT platform of MOLFöldgázszállító Rt, Hungarian oil and gas company MOL’s gas transmission company. The project should becompleted by next year. Synergon announced the deal yesterday. Shares in Synergon were trading up 3.2% on

the day at 350 at 2:16 PM yesterday, following the announcement. German energy giant E.ON has an option topurchase a 75%-minus-one-vote stake in the transmission company which came with its purchase of a controllingstake in MOL’s entire gas division in November of this year. (Econews; NG 12)

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Porsche Hungária car sales up 5.5% in 2004Porsche Hungária Kft, one of Hungary’s biggest car dealers, expects to sell 5.5% more vehicles this year than in2003, generating revenue of about Ft 150 billion, up from Ft 128 billion in 2003. The company expects to sell42,500-43,000 vehicles by the end of this year, giving it a 19% share of the market, managing director JánosEppel said at a press conference in Budapest yesterday. Next year, Porsche Hungária expects to sell 44,000-46,000 vehicles. Porsche Hungária sold 1,415 Audis this year compared to 1,175 last year. (Econews; Vg 13)

FHB voting preference shareholders sign agreementLand Credit and Mortgage Bank (FHB) Rt said on yesterday that the holders of the voting preference shares,along with the bank, signed a syndicate agreement to strengthen the neutrality of FHB. FHB said that theagreement had been indicated in the offering prospectus of FHB’s IPO of ordinary shares in November 2003. Theshareholders involved clarified the legal relations between each other in the agreement, particularly in the event of transfer of voting preference shares, FHB said, adding that the agreement came into force on December 14,2004. (Econews; NG 11)

Austrian bank opens Budapest office Austria’s Niederosterreichische Landesbank-Hypothekenbank AG has opened a representative office in Hungary.The office, which does not provide financial services, but which mediates for its clients, was registered with theHungarian Financial Supervisory Authority (PSzAF) on December 1. Niederosterreichische Landesbank-Hypothekenbank is the second Austrian bank to open a representative office in Hungary. There are eighteen

other foreign banks with representative offices in Hungary, including one Israeli bank, two Ukrainian banks andIndia’s Export-Import Bank. (Econews)

Magyar Sugar co. exceeds EU quotaSugar manufacturer Magyar Cukor Rt, which holds 14% of the Hungarian market, will manufacture a record161,000 tons of sugar this year, announced CEO Béla Fischer at a press conference yesterday. This amount is10% more than quota set by the EU for Magyar Cukor. Due to EU regulations and quotas the company bought1.13 million tons of sugar beet this year, 75% more than last year at Ft 11,900 per ton. The company expects toboost its turnover to Ft 20.8 billion next year from this year’s Ft 16.8 billion. Béla Fischer also added that sugar coming to the country from the Balkans accounts for 10-15% of the Hungarian market. (NG 5, Vg 16) R.G.

Avaya uses Budapest as EMEA center US telecommunications company Avaya Inc. is set to expand its Budapest technical support center into an EMEAregional center early next year, the company announced at a press conference yesterday. While no details were

disclosed on the investment, CEO Gábor Rohány said staff recruitment for the new office will start this month. Thecompany’s local subsidiary Avaya Magyarország Kft reported revenues up 20% in its financial year ending Sept.30, 2004. (Vg 1) S.F.

Délhús enlarges Alsómocsolád plantMeat processor Délhús Rt has increased the capacity of its Alsómocsolád plant in south-western Hungary to anannual 8,000 tons of meat with an investment of Ft 1 billion, announced Thomas Jobban, president of thecompany’s board of directors at the plant’s opening yesterday. Délhús Rt forecasts Ft 35 billion in turnover nextyear after having Ft 30 billion in 2004. (NG 4, Vg 13) R.G.

Stock exchange awardsFinance Minister Tibor Draskovics presented this year’s awards at the Budapest Stock Exchange (BÉT) Rtyesterday. The Best Brokerage 2004 award went to Erste Bank Investment Rt, while ING Bank Rt’s was voted thebest analyst team of the year. MOL Rt headed the list of stock issuers, FHB Rt was chosen for the Best Bond

Issuer award. The stock exchange community granted its Man of the Year award to Richter Rt CEO Erik Bogsch.In his keynote speech, BÉT president Attila Szalay-Berzeviczy said the bourse had an outstandingly successfulyear in 2004, with the positive trend expected to continue next year. (Nv 3) P.P.

Club Aliga sale stallsThe tender for the holiday resort Club Aliga at Lake Balaton was unsuccessful because of the lack of offers, said Árpád Bardóczy, official at Treasury Asset Management (KVI). Bárdóczy cited the stagnating real estate marketand the dwindling number of tourists at Lake Balaton as reasons behind the lack of interest. The complex was for sale at Ft 8 billion plus VAT. (NG 3) R.G.

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Power utility E.ON Edasz to be delisted from BÉTThe last power utility owned by German energy group E.ON, Edasz Rt, will also be delisted from the BudapestStock Exchange, following the exit of E.ON Titasz and E.ON Dedasz earlier this year, the company announced.(AS; NG 11)

Court nullifies referendum result

The Supreme Court yesterday annulled the result of the December 5 referendum on citizenship and hospitalprivatization and ordered election authorities to verify the results in some 10% of all polling stations. The rulingcame over an appeal in which the World Federation of Hungarians (MVSz), the right-wing civil group that initiatedthe referendum on citizenship demanded a recount of the votes, claiming „yes” and „no” votes had beeninterchanged in some voting districts. National Election Office head Emlia Rytkó said the Court nullified theNational Election Committee’s (OVB) recent decision in which the OVB declared the referendum results invalidbecause of low voter turnout. (MTI; MH 1, Nb 1, Vg 1, NG 3, Nv 9)

EconomicsInflation figures lower than expected According to Central Statistics Office (KSH) figures released yesterday, inflation in November was 5.8% yr/yr,somewhat lower than the average 5.95% previously anticipated by analysts. Prices rose by 0.1% in November compared to the previous month. The lower-than-expected November inflation figures were due to the slowingincrease in food prices and the stagnating prices of services. Analysts forecast a 50 basic point rate cut by theNational Bank of Hungary next Monday. (NG 3, Vg 4) R.G.

PoliticsParliament adopts amendments to central bank lawParliament yesterday adopted a series of amendments to the National Bank Law, two weeks after PresidentFerenc Mádl returned them for reconsideration. Parliament first passed the amendments on Nov. 22, and theyhave now been passed for a second time and will take effect without the president’s signature. The law calls for an increase in the number of members on the bank’s rate-setting monetary council from the current 7 to 9 personsto a maximum 11 people, and grants the prime minister the right to appoint five of the members, with the consentof the central bank’s president. However, it is not likely that new members will be appointed by the end of thisyear, Finance Minister Tibor Draskovics announced yesterday. (MTI; NG 3)

Parliament probes chief prosecutor’s assets

The Parliament launched an inquiry yesterday to verify allegations saying the chief public prosecutor failed toaccount for hunting trophies in a mandatory assets test. Alajos József Geczi, chairman of Parliament’s immunitiescommittee, said he ordered the investigation after the chief prosecutor Péter Polt repeatedly declined to providehim information on the value of the trophies he owned. The inquiry had been called for by socialist MP LászlóKeller, who submitted a video tape to the committee chairman proving that Polt took part in a hunt and shot a deer whose antlers were apparently exceeded the threshold value for declaration. „The value of the trophy was morethan Ft 300 thousand (Euro 1,200),” Geczi said. (MTI; Nv 3, MH 6)

DomesticAgreement on 6% public sector wage rise signedThe National Public Sector Interest Mediating Council (OKET), which represents the interests of the government,local councils and public sector unions, signed an agreement on a 6% gross wage rise for public sector workers in2005. The agreement was signed in the presence of the Prime Minister yesterday. The wage agreement almost

fell through late Monday evening, because municipalities said they did not have enough money to cover thehigher payroll costs. (Econews; Nv 1, NG3, Vg 4, MH 12)

Government mulls tightened security billThe government today discusses a new bill that would tighten legal control on the activities of security guards andprivate detectives in terms of eligibility and prerogatives. If the proposal is approved, soldiers, prison wards,border guards, customs and excise officers, firefighters and members of the secret service will be banned fromseeking employment as security guards or private investigators - in addition to police officers, who are alreadyexcluded. The draft also declares that privately employed security personnel do not have the right to requirepeople to identify themselves, to search personal belongings or to body search people suspected of theft. (Nv 3)P.P.

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Police make bumper drug haulHungarian police made one of their largest narcotics catches, seizing drugs with a street value of around Euro600,000 in a Budapest flat last week, Esztergom police (north-western Hungary) reported yesterday. Police hitupon the drugs - including 16 kilograms of amphetamine, 10,000 ecstasy pills, 17,000 LSD blotters and threekilograms of cocaine - last Thursday as they were being measured out and packaged by a dealer, Lieutenant-Colonel István Keil said. The catch was the result of an investigation which began in 2001 and has led to several

arrests. Keil said the announcement was withheld before Tuesday because police wanted to tie up all loose endsof the investigation before making the case public. (MTI; MH 2, Nv 16, )

One-third of 16-year-olds smoke regularlyNearly three-quarters of Hungarian teenagers have experimented with cigarettes, according to a surveyconducted in the spring of 2003, and covering over 100,000 16-year-olds from 35 European countries. ZsuzsaElekes, head of the Hungarian project, told reporters in Budapest yesterday that 72% of the 2,600 16-year-oldsinterviewed in Hungary admitted to having experimented with cigarettes and 31% said they were regular smokers,she said, adding that both figures were higher than the European average. With 16% of the sample admitting tohaving experimented with drugs, Hungary was more or less at the bottom of the list. (MTI; MH7)

StockwatchBUX index: BUX Close: 14473.22 Change: +185.58 (1.30%)Stock Closing price Daily change (%) Average price Volume

MOL 12,450 1.3 12,560 697,544

Matáv 855 2.4 846 1,206,816

OTP 5,510 1.1 5,506 1,401,703

Richter 21,695 0.8 21,676 77,319

Egis 10,850 1.9 10,864 9,880

Antenna 3,860 0.5 3,868 2,373

TVK 5,165 -0.6 5,197 3,910

Rába 710 2.2 701 12,322

Budapest Stock Exchange, Dec 15

Exchange

In forints, Dec 15, 2004National Bank of HungaryFixed Middle RateEUR 1 246,98

USD 1 185,49

GBP 1 357,27

CAD 1 151,08

CHF 1 160,65

JPY 100 176,69

CZK 1 8,06

PLN 1 58,93Weather Tomorrow: cloudyHigh 3°C (37°F)

Low 0°C (32°F)

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16 December 2004BusinessGloomy forecast for residential real estate A steep 6%-8% rise in the price of construction materials, land for development and labor costs on the one handand flagging demand on the other will put residential real estate developers in a double whammy next year,

market research company GKI Rt and industry sources concurred. As a result, several small market players areexpected to go out of business or merge into large corporations. While stamp duties will increase from Januaryand some buyers have therefore hastened to complete the transaction before the end of the year, the panicbuying witnessed a year ago is not repeating itself. (Vg 1) P.P.

Styl’s worth divesClothing manufacturer Styl Rt’s net worth significantly decreased to under the two-third mark of its registeredcapital, to Ft 878 million, the company announced at an extraordinary board meeting on Monday. The board of directors decided to start negotiations with strategic investors about a possible capital increase. Due todecreasing orders the company has accumulated approximately Ft 1 billion in losses since 1998, Ft 208 million in2004. (Ng 11, Vg 17) R.G.

Matáv votes for structural changesTelecommunications company Matáv Rt’s board decided in favor of structural changes in the group in order to

boost efficiency and make the company organization simpler. The position of the vice CEO responsible for logistics and services will be abolished as of January. Retail telephone and Internet services will be integrated intoone branch to be lead by Christopher Mattheisen, the retail branch’s current leader. T-Mobile’s president CEO András Sugár will become a member of Matáv’s managing board as of Jan. 1. (Ng 11) R.G.

EHF creditors to be repaidMarking a rare precedent in the history of the Hungarian capital market, shareholders of bankrupt factoring houseElso Hazai Faktorház Rt (EHF) agreed to pay back to creditors their entire investment plus a 3.3% interest in a bidto settle several ongoing legal battles waged by lenders since the company went into liquidation back in 1996,which lasts to this day. EHF’s liquidator, Deloitte Rt was initially hoping to sign up a new investor, which eventuallybacked out of the deal leaving EHF without an operating licence by 1999. (MH 12) S.F.

Revenue at GTS-Datanet jumpsThanks largely to a Ft 1.5 billion investment implemented this year, revenues at GTS-Datanet Kft jumped 13% in2004 exceeding the Ft 10 billion mark, the telecommunications company said. GTS is poised for moreinvestments and acquisitions next year and hopes to boost its sales by 20%. Established in Hungary 11 yearsago, GTS-Datanet currently has 65,000 clients, mostly small companies and private customers. (Nv 5, Vg 13) S.F.

Dámtej on the moveDairy company Dámtej Kft will soon move from Tamási, southwestern Hungary, to nearby Kaposvár and changeits name to Fino-Tej Kft, shareholder László Egyed told Világgazdaság. The reason for the move is that thecompany needs upgrade its production processes anyway to bring it in line with EU regulation, and Kaposvár is amore convenient location for ease of supplies. The new plant will have a milk processing capacity of 20 millionliters per year, in comparison to the current 10 million-12 million liters. Majority owned by suppliers, the companyhas a product portfolio mostly consisting of cheese and heavy on premium products. It employs a staff of 100 andexpects Ft 1.6 billion in sales in 2005 after this year’s Ft 1.5 billion revenue. (Vg 16) P.P.

Ground broken on RiverLoft projectReal estate developer GTC Hungary Rt has broken ground on an office complex and a residential project,Managing Director Robert Snow said. The RiverLoft project will consist of 170 apartments and 5,700 sqm officespace in what used to be an industrial property in Dist. 13. The Center Point 2 complex, located in the samedistrict, will deliver 22,500 sqm of office space in a structure adjoining the earlier completed Center Point 1. GTCHungary was established in 1994 by Globe Trade Centre SA, a Polish company whose stocks are majority ownedby Dutch-registered GTC International BV and also traded at the Warsaw Stock Exchange. (Vg 23) P.P.

Audi expects sales of Euro 4 billion Audi Hungária Motor Kft expects to finish the year with sales of Euro 4 billion, up from Euro 3.7 billion in 2003.Profits will also rise, according to Heinrich Franke, the company’s CFO, although he would not disclose by howmuch. Audi Hungária made more than 1,460,000 engines at its plant in Gyor (W Hungary) this year, 10% morethan in 2003, CEO Thomas Faustmann said yesterday. The factory made more than 20,000 of Audi’s TT sportscars, and also beat out several other factories in the region to make the new TT model, starting in 2006.(Econews; Vg 13, Nb 11, MH 12)

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OTP to boost certain interest ratesOTP Bank Rt has agreed with the Hungarian government to boost the interest rate on the accounts of its 66,000clients who are in guardianship. Budapest-based OTP will spend Ft 700 million next year to boost the interest rateby 0.75 %age points to 7.5 % on sight accounts worth Ft 38 billion, said Boglár László, a governmentspokeswoman. The rate will apply to children in foster care or incapacitated people who have others handlingtheir finances. (Bloomberg; MH 3)

PSzÁF approves Credigen’s capital reductFinancial market regulator PSzÁF has approved a reduction in the registered capital of Credigen Bank Rt from Ft2.491 billion to Ft 2 billion. Credigen’s capital has been raised and reduced several times over the last years inorder to account losses and to bring registered capital in line with net assets. Credigen’s owner, Scofino of France, last raised Credigen’s capital by Ft 250 million in July 2004. In 2002 Credigen had net loss of Ft 293.4million, in 2003 losses totaled Ft 189.3 million. PSzÁF ordered the bank already in 2002 to draw up a plan to bringCredigen into compliance with capital requirements, and it complied. (Econews)

EconomicsElectricity prices set for hikeThe government will hike electricity prices by 10% as of February, with plans to announce the new price plan inlate January, unnamed sources told Népszabadság. The newspaper has also learned that financially challengedconsumers will pay a reduced price for power, with a subsidy framework still negotiated by the Economy andTransport Ministry and the Hungarian Energy Office. The recent increase in the global price of natural gas, whichaffects the majority of Hungarian power plants, accounts only for a 3% price hike. The other key factors includethe appreciation of power utility assets and that distributors are obliged to buy electricity from environment-friendlypower plants even at a higher price. (Nb 1) P.P.

Growth expected to slow According to economic research company Ecostat’s forecast, the growth of export will somewhat decrease nextyear due to anticipated slow-down of consumption growth in the EU in 2005. Ecostat’s estimate for next year’seconomic growth is 3.8%, compared to this year’s anticipated 4%. Bank Austria Creditanstalt forecasts 3.5% GDPgrowth for the last quarter and 3.4% and 3.6% for the 1st two quarters of 2005 respectively, compared to anaverage estimate of 3.5% and 4.3% for the same periods for the 8 countries in the region which recently jointedthe EU. (Ng 1) R.G.

Electricity prices set for hike

The government will hike electricity prices by 10% as of February, with plans to announce the new price plan inlate January, unnamed sources told Népszabadság. The newspaper has also learned that financially challengedconsumers will pay a reduced price for power, with a subsidy framework still negotiated by the Economy andTransport Ministry and the Hungarian Energy Office. The recent increase in the global price of natural gas, whichaffects the majority of Hungarian power plants, accounts only for a 3% price hike. The other key factors includethe appreciation of power utility assets and that distributors are obliged to buy electricity from environment-friendlypower plants even at a higher price. (Nb 1) P.P.

Growth expected to slow According to economic research company Ecostat’s forecast, the growth of export will somewhat decrease nextyear due to anticipated slow-down of consumption growth in the EU in 2005. Ecostat’s estimate for next year’seconomic growth is 3.8%, compared to this year’s anticipated 4%. Bank Austria Creditanstalt forecasts 3.5% GDPgrowth for the last quarter and 3.4% and 3.6% for the 1st two quarters of 2005 respectively, compared to an

average estimate of 3.5% and 4.3% for the same periods for the 8 countries in the region which recently jointedthe EU. (Ng 1) R.G.

Social security deficit some Ft 406 blnThe latest prognosis of the Finance Ministry based on data available by October estimates the annual deficit of the Social Security Funds at Ft 406 billion, compared to a previous estimate of Ft 380.9 billion. The deficit growthis mainly due to less than expected income. The Health Administration Fund accumulated Ft 316.7 billion in deficitin 11 months while its incomes were 3.6% behind expectations. Ft 257.8 billion were spent on medicine subsidiesso far compared to the Ft 283 billion allocated for the entire year. The Ministry expects a Ft 5 billion saving onsickness benefit expenditure thanks to the fact that there has been no major ’flu epidemic this winter. (Ng 3) R.G.

Oct industrial output up 8.4% yr/yr Hungary’s industrial output rose 8.4% yr/yr in volume terms in October, according to working-day-adjusted figures,and was up 1.8% from September according to seasonally- and working-day adjusted figures, the Central

Statistics Office (KSH) said yesterday. Exports continued to drive the increase in production. Unadjusted industrialoutput rose 5.7% over the year in October. In the first ten months, industrial production rose by 8.5% yr/yr on theback of a 17.1% rise in exports and a 0.9% decline in domestic sales volume. (Econews; Ng 4, Vg 5)

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2 mln tons of cereals for interventionHungarian farmers have offered 2 million tons of cereals to be put into EU intervention stores, half of the amountoffered by all 25 EU members. Ministry of Agriculture and Rural Development official László Vajda told saidyesterday that the ministry had notified the EU that Hungary expects to offer 4 million tons of cereals to be put intointervention store in the current intervention period between November and next May. Hungary had a bumper crop in 2004, harvesting 16.5 million tons of cereals, more than double the amount in 2003. (Econews; Vg 3, Nv

5)Orders for manufacturing up 17.4% in OctHungary’s manufacturing sector had 17.4% more new orders in October 2004 compared to twelve months earlier,the Central Statistics Office (KSH) said yesterday. New export orders were 23.7% higher, while domestic orderswere 5.9% down from October 2003. New export orders rose 34.7% yr/yr for vehicle industry and orders for electric equipments increased 25.6%. The total stock of orders rose 18.2% in the twelve months to the end of October, with domestic orders rising 0.8% and export orders rising 22% yr/yr. (Econews; Vg 5)

Brownfield investment for MarcaliThe municipaity of Marcali, western Hungary recently launched a major brownfield investment that will seeconstruction of a cultural center, medical facility and service house for Ft 1 billion on the site of the town’s former military baracks. The project is 90% bankrolled through state funds granted under the regional developmentoperative program (rop). This year the municipality also won Ft 1.6 billion in grants for hospital reconstruction. (Vg

7) S.F.Hungary to spend Ft 10 bln on tourismHungary will spend Ft 10 billion on efforts to promote tourism in the country next year, Ft 800 million more thanplanned. Speaking at tourism and catering conference yesterday, state secretary in charge of regionaldevelopment and tourism at the Prime Minister’s Office Béla Pál said Ft 8 billion of the money would be spent tomake Hungary more attractive to tourists, and Ft 2 billion would go toward developing tourism services. Themoney is part of Ft 28 billion which Hungary is spending to help the tourism industry in 2004, 2005 and 2006.(Econews)

Borrowing costs down on bills saleHungary’s borrowing costs fell at a sale of Ft 30 billion of six-month bills. The securities were sold at an averageyield of 8.89 %, down 40 basis points from an auction two weeks ago, the government’s Debt Management Agency said on its Bloomberg page. A basis point is 0.01 %age point. The average yield was also 21 basis points

lower than on similar securities in the secondary market yesterday. The maximum yield at today’s auction was8.93 % and the minimum was 8.85 %. The agency received 148 bids worth 85.7 billion forints and accepted 47 of them. (Bloomberg)

M&A activity flat in Hungary this yr Mergers and acquisitions activity in Hungary remained flat in 2004, according to a study by KPMG ConsultancyKft. Just 75 deals were made in Hungary up to November, compared to 121 a year earlier. The deals were wortha combined USD 1.8 billion, compared to last year’s USD 1.7 billion, worth actually less, considering the dollar’sdecline against the forint. However, Hungarian companies still made some big deals before the end of the year.(Econews)

EBRD provides Euro 10 mln credit lineThe European Bank of Reconstruction and Development (EBRD) will provide a Euro 10 million credit line to SGEszközfinanszírozás Magyarország, which is owned by France’s Societe General, to help finance SME leasing,

EBRD said yesterday. The money will be used to help SMEs, mainly in the high-tech sector, finance the lease of vehicle and equipment. Small businesses may take out up to Euro 30,000, and medium-sized businesses at mostEuro 125,000 of the money available under the credit line. The loan is part of EBRD and the EU Commission’s joint SME Financing Facility program launched under the aegis of the Phare program. (Econews)

Politics„Media restriction not unconstitutional”Restricting media activities in parliament and government buildings is legal and does not violate the constitution or freedom of the press, but journalists may not be discriminated against on any basis, including the media branchfor which they work, the deputy commissioner for civil rights said in a statement on Wednesday. Ombudsman Albert Takács was responding to a complaint filed by two Hungarian television broadcasters in November after House Speaker Katalin Szili banned all journalists from the electronic media from the corridor outside the meetinghall. Szili’s move came after conversations among MPs were recorded and made public, and she continued toallow access to the written press. (MTI; Nv 3, MH 2)

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DomesticBig firms set up homeless charityTen major Hungarian companies have set up a Ft 100 million foundation to help out the capital’s thousands of homeless. The founding document of the Foundation for the Future of the Homeless was signed in Parliamentyesterday and Prime Minister Ferenc Gyurcsány was there in his capacity as patron. The ten major Hungariancompanies - which include blue chips such as telco Matáv Rt and OTP bank Rt, as well as smaller companies likePorsche Hungária Kft and shopping mall Mammut, each offered Ft 10 million to the foundation, which plans toestablish shelters in Budapest. (MTI; Vg 7)

Yad Vashem recognizes Hungarian divaEvery year non-Jews who put their lives at risk to save Jews from the holocaust are honored by the Jerusalem-based Yad Vashem Institute, and this year Hungary’s film-star and torch-song legend Katalin Karády wasposthumously thanked for rescuing a group of children on their way to be shot into the river Danube by bribing Arrow Cross guards with her jewelery. The title of Righteous Among the Nations was also granted yesterday totwo Hungarians and to family members of twelve others who have now passed away by Israel’s Ambassador David Admon in a ceremony at Budapest’s Academy of Science. (MTI; Nv 4)

ÁSz faults Managed Patient CareThe Health Ministry’s experimental Managed Patient Care model is not financially or technically viable,unregulated and poorly designed, the State Audit Office (ÁSz) found in a review of the first 5 years of the system,advising the government to discard the model altogether. Controlled Patient Care is a financial model that rewardsprivate healthcare service providers if they minimize spending on patient care. Currently, 2 million Hungarians areparticipating in the „experiment”. The government will probably seek remedies instead of winding up the system,Socialist MP Zsuzsa Kárpáti said. (Nb 1) P.P.

StockwatchBUX index: BUX Close: 14,525 Change: 52,02 (0.36)

Stock Closing price Daily change (%) Average price VolumeMOL 12,350 -0.8 12,407 264,420Matáv 868 1.5 861 2,887,239OTP 5,550 0.7 5,552 746,308Richter 21,790 0.4 21,749 27,094

Egis 10,900 0.5 10,870 7050 Antenna 3,870 0.3 3,863 2,956TVK 5,200 0.7 5,194 1,918Rába 705 -0.7 704 11,198Budapest Stock Exchange, Dec 16

Exchange

In forints, Dec 16, 2004

National Bank of Hungary

Fixed Middle Rate

EUR 1 245,9USD 1 184,65GBP 1 356,23CAD 1 149,41CHF 1 160,66JPY 100 176,31CZK 1 8,03PLN 1 59,06Weather Tomorrow: snow

High 5°C (41°F)Low 2°C (36°F)

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17 December 2004Business

FreeSoft lands big Vodafone contract

Software company FreeSoft Rt, which was floated on the Budapest Stock Exchange in September, has signed abig contract with the Hungarian subsidiary of Vodafone worth almost Ft 700 million over several years. The dealwill be entered on the books over several years and is worth 10% of FreeSoft's 2003 revenue. FreeSoft hadrevenue of Ft 634 million in 2003. FreeSoft also announced that its third-biggest shareholder, Zoltán Popovics,sold FreeSoft shares on December 15 on the stock exchange, reducing his stake in the company from 10.5% to2.09%. (Econews; Ng 11, Vg 17)

Ericsson gets T-Mobile 3G deal

Mobile operator T-Mobile has chosen Swedish telecommunications equipment producer Ericsson to develop its3G network, T-Mobile's president CEO András Sugár told newspaper Világgazdaság. Finnish Nokia and GermanSiemens also applied for the assignment but Ericsson's offer was the most favorable, Sugár added Theinvestment is valued several billions of Forints. Pannon GSM Rt, the other company which was granted a 3G

license along with T-Mobile last week, has not chosen its network builder yet, the company's communicationsdirector Dóra Somlyai said. (Vg 1) R.G.

Royal-Bau gets immunity for evidence

The Competition Office (GVH) yesterday decided for the first time not to fine a company taking part in a cartel for providing evidence and cooperating with GVH. Construction companies Royal-Bau Rt and Construma Kft hadmade an agreement in 2002 in the last phase of a municipality construction tender in Budapest's 6th Distr. Thetwo agreed that Construma would submit a winning offer then step back and that the companies would realize theproject together afterwards. In course of the realization of the project Royal Bau Rt grew discontent with theagreement and turned to the GVH. The Competition Office offered impunity for companies providing informationon cartels in the summer. Construma Kft was fined Ft 16.5 million. (Vg 1) R.G.

Italians barred from using Tokaj name

Italian winemakers will be forbidden to use the Tokaj name from March 2007, a Hungarian Justice Ministry officialsaid yesterday. Deputy State Secretary Judit Fazekas referred to an opinion by Francis Geoffrey Jacobs, Advocate General of the Court of Justice of the European Communities, published earlier yesterday. The body isexpected to issue a statement early in 2005 confirming an Italian national law banning the use of names reservedfor wines originating from the historical region of Tokaj-Hegyalja. Currently wines from Italy are produced bearingthe labels "Tocai Friulano" and "Tocai Italico". (MTI; Vg 5, Nb 16, Nv 16)

ÁPV won't give Malév Ft 3 billion

Hungarian national carrier Malév Rt will not get an earlier promised Ft 3 billion capital injection; and the date for anew tender for its privatization will be announced by the end of the year. The board of the State Privatization andHolding Company (ÁPV) decided yesterday that Malév did not need the capital injection, and another solutioncould be found for the airline's capital problems, ÁPV spokesman Péter Oravecz said. A cabinet meeting in Aprilpromised Malév the Ft 3 billion injection before the end of the year if it demonstrated that it was able to operatewithout losses. ÁPV's decision must still be submitted for approval by the Finance Minister and the Minister of Economy and Transport. (Econews; Ng 4, MH 3, Nv 6, Vg 13)

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Viasat may terminate broadcasts

Commercial TV channel Viasat 3 might terminate its terrestrial broadcast in Budapest and the surrounding areas,according to Világgazdaság. The TV channel is planning the move to cut costs of broadcast fees and to resolve adispute with the National Radio and Television Board (ORTT). ORTT launched an investigation against several

channels, including Viasat 3 in September, claiming that the TV's programs, despite being registered as regionalchannel, are available throughout the country. Attila Kocsis, CEO of the channel did not comment on the news,but announced that the channel's turnover increased by 55% in the fist 10 months of the year. (Vg 16) R.G.

Fotex chief remains richest Hungarian

Gábor Várszegi, chairman of retailer Fotex Rt, retained his lead among Hungary's 100 richest people with anestimated wealth of Ft 46 billion this year, a recent publication by Ringier revealed. Sándor Demján, President of real estate developer TriGránit Rt, and Gábor Széles, who is president and CEO of two companies, IT firmVideoton Rt and bus maker Ikarus Kft, came a close second. The editors said the list was based on estimates of the legal assets belonging to the 100 richest Hungarians and also included the assets of family members. (MTI;Nv 6, Vg 13)

Pick fined Ft 30 million

The Competition Office (GVH) fined salami maker Pick Szeged Rt Ft 30 million for misleading consumers byprinting "No 1" on 16 of its products without supplying evidence to back up the claim of superiority compared to itsrivals' products, GVH said yesterday. GVH noted that Pick had already been fined Ft 1 million in June this year for the same misconduct. Claiming as fact something that is not proven by hard evidence is a breach of the law, theGVH statement said. (Econews; Vg 13)

K&H Bank gets Euro 250 mln loan

K&H Bank Rt, Hungary's second-biggest retail bank, has taken out a Euro 250 million, five-year loan from a

consortium of 18 banks, including its owner, Belgium's KBC, to finance further growth and to strengthen itsliquidity position. The loan carries EuroIBOR plus 20bp interest in the first three years, and EuroIBOR plus 22.5bpin the fourth and fifth years. K&H Bank will repay the loan in a lump sum upon maturity. (Econews; Vg 19)

MOL announces in Polish press

Hungarian Oil Company, MOL Rt's new announcement appeared in the Polish papers yesterday providinginformation on the introduction of MOL shares in Poland. The trade is expected to start on the 2nd or the 3rd dayof next week. In order to ease liquidity problems on the Warsaw market, the Hungarian oil company will sell 5.3million of its own shares. Analysts' opinion is positive on this issue. MOL's profit is expected to be around Ft 200-220 billion this year. (Ng 12) E.C.

APEH may auction off Excel Europa

According to an announcement by Csepel Holding yesterday, the National Tax Office (APEH) is to auction99.96% of Excel Europa Kft as a result of tax dues accrued towards APEH. If APEH and Excel Europa fail tocompromise, they will carry out the auction on January 10, 2005. Csepel Holding owns a nearly 100% share intool production firm Excel Csepel Kft and real estate company Excel Europa. Csepel made a profit of Ft 503million last year. (NG 12) E.C.

Kingspan building Euro 11 mln factory

Irish building materials maker, Kingspan, has started work on a Euro 11 million plant just south of Budapest whichwill produce insulated panels. Production will start in July 2005. Vince Bukva, who manages Kingspan'sHungarian subsidiary, said the plant would produce 2 million square meters of insulated panels a year worth Euro

40 meters. The company will sell 60% of the panels in Hungary, and the rest in other countries in the region.(Econews)

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New Peugeot salon at Budaors

Fábián Kft has recently opened a new Peugeot salon at Budaörs. The investment on the 1.5 acre land cost Ft 1.5billion. The salon and garage have been constructed on 3840 sqm, 750 sqm of which is the salon where 14automobiles can be displayed at once. The garage consists of 24 stands, 4 of them are rapid service stations. Theyearly selling capacity of the complex is 900 motor vehicles and SUVs. The newly opened Peugeot salon and

garage complies with the Blue Box norms, which means that every showroom is being converted into a box-likeroom painted in blue as the corporate color. The first of such complexes opened in Hungary was in 2001. (NgInsert) E.C.

Economics

M'way stickers to rise 15% from Jan

Motorway tolls will rise an average 15% in January, state motorway company Állami Autópálya-Kezelo saidyesterday. A 6% inflation rate and 56 km of new motorway were considered when deciding on the raise. The four-day sticker for cars, in the "'D1" category, will be Ft 1,120 during the off-season and Ft 1,460 from May toSeptember. The four-day sticker accounted for 62% of all sticker sales in 2004. The ten-day sticker for cars will be

Ft 2,300, the monthly pass will be Ft 3,900 and the yearly pass will be Ft 35,000. Trucks over 12 tons, in the "D4"category, will pay Euro 8 (Ft 2,000) for a day-pass - the first time the pass has been introduced - and Euro 750 (Ft190,000) for a year-pass. (Econews; MH 4, Ng 5, Nv 6, Nb 15)

Real wages slip 0.4% yr/yr in Jan-Oct

Real wages fell 0.4% in the first ten months of the year compared to the same period in 2003, the CentralStatistics Office (KSH) said yesterday. Net wages rose 6.6% during the period and consumer prices were up7.0%. In October alone, real wages were down 1.7% yr/yr. Gross monthly wages rose 4.8% yr/yr in October to Ft143,259 and gross monthly wages in the first ten months of the year rose 7.6% yr/yr to Ft 141,399. Net monthlywages rose 4.5% yr/yr in October to Ft 92,352 and grew by 6.6% to Ft 91,533 in ten months. (Econews; Ng 3, Vg5, MH 13)

Járai sees legal challenge to bank law

Hungary's central bank expects to go ahead with a legal challenge to a new law expanding the bank's rate-settingcouncil with nominees of the prime minister, Governor Zsigmond Járai said yesterday. A final decision on legalaction would be taken early next year, Járai said. The governor said the central bank law, passed by theHungarian parliament on Monday, was bad for the country's institutional integrity and was an attempt to meddle inmonetary policy. Járai said the move to expand the Hungarian monetary council to 13 from nine members andallow Prime Minister Ferenc Gyurcsány to nominate the four new members infringed on the bank's independence,going against the objective of EU law. (Econews; Ng 3)

BKV/services price rise decided

The Budapest assembly decided in favor of a 10% price hike of Budapest Transport Company (BKV Rt) tariffs asof January and an additional 5% rise as of July. A single ticket will cost Ft 160, a monthly pass Ft 5.960 from Jan.1 and Ft 170 and Ft 6.250 from July respectively. The assembly also decided to raise sewage fees by 14.8%, theprice of running water by 5.7%, waste management services by 9.1% and the price of burial services by 6.1%.(Vg 5) R.G.

No significant drug price hike expected

The increase in subsidized drug prices will be decided soon, but according to earlier information, no significantincrease is expected from January. The rise in state subsidized drug prices will barely reach the 7% growth level,according to Napi Gazdaság. Among the 5000 non-subsidized drugs, only 600 are to cost as much as they did atthe beginning of this year, the rest will not change at all or still cost less than in January. After this year's drug war,

the deficit of the National Health Insurance Fund has reached Ft 316,7 billion until the end of November asopposed to earlier presumptions of Ft 278 billion. (Ng 3) E.C.

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FinMin makes call for lower rates

Hungary's Finance Minister Tibor Draskovics has repeated the government's call for lower interest rates and aweaker forint, though he left the extent to which rates may fall up to the central bank. Draskovics said thegovernment would like to see interest rates and the forint's exchange rate in harmony with the inflation target andthe economic situation of the country. "The government does not believe that it is possible to improve long-term

competitiveness through sudden, drastic measures, even exchange rate policy measures", Draskovics said at aconference organized by KPMG, yesterday. (Econews; MH 11)

Cigarette price war could hurt budget

Hungary's biggest cigarette firms have started a price war, each cutting the price of major brands by 12%, whichcould mean Ft 3.1 billion less going into the government coffers via tax. But increased competition could alsoboost cigarette sales if smokers turn from the black market to legally sold domestic brands. This wouldcompensate for lost VAT and excise revenues. British American Tobacco Magyarország (BAT) Kft, Hungary'sleading cigarette maker, lowered the price of its Pall Mall brand from Ft 500 to Ft 440 in late November. OnWednesday, Hungary's second-biggest cigarette maker, Philip Morris Hungary Kft, responded by trimming Ft 60off the price of its Multifilter brand, which also sells for Ft 500. (MTI)

Mobile phone usage rising

The number of mobile phone users in Hungary was 8,456,000 at the end of October 0.9% higher than a monthearlier, the telecom authority National Telecom Authority (NHH) said. Yr/yr growth is 11.1% compared to7,614,000 of last October. From end of Sept to the end of Oct Vodafone increased its market share from 19.12%to 19.38% Pannon GSM from 33.27% to 33.43%, while T-Mobile Hungary decreased from 47.61% to 47.19%.(MH 12) G.R.

Politics

MEPs condemn Vojvodina ethnic violence

MPs of Serbia-Montenegro and European legislators, meeting in Strasbourg yesterday, condemned incidentscommitted against minorities in the North Serbian province of Vojvodina and called for resolute action to preventfurther occurrences. The Serbian side argued, however, that some of the incidents had been exaggerated, andlaid part of the blame at the feet of the European Parliament. The EP inter-parliamentary committee session, thefirst one in two years, was attended by two Hungarian MPs, who are to join an EP fact-finding committee in lateJanuary to investigate the incidents, including assaults on minorities, desecration of cemeteries and death threatsto politicians. (MTI)

Domestic

Bp-Rijeka m'way to be finished by '09

A motorway between Budapest and Rijeka, on Croatia's Adriatic coast, will be completed by 2009, Minister of Economy and Transport János Kóka told a meeting of transport ministers from Hungary, Croatia, Italy andSlovenia yesterday. Kóka and Croatian Ambassador Stanko Nick signed an inter-governmental agreement on theconditions of the construction of a motorway between Letenye, on the border with Croatia, and nearby Gorican, inCroatia, at the meeting. A Euro 10 - 12 million bridge over the river Mura, the natural border between Hungaryand Croatia, will join Hungary's M7 motorway and the Croatian motorway. (Econews; MH 1, Ng 3, Vg 5)

Court judges fall to quorum limit

The Constitutional Court has reached to the edge of its quorum. On Tuesday the mandate of the Court's member,János Strausz will expire. The body originally had eleven members, but with the retirement of Strausz only eightwill remain. The situation has come about because the parliamentary parties could not agree on electing newmembers to the Court this week, and postponed the decision to February, Speaker of Parliament Katalin Szilisaid. (Nv 3, MH 7) G.R.

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Environmental agencies face restructuring

Government decided to reorganize environmental authorities from Jan 1. The existing 12 environmental and 12water authorities will be merged into 12 unified supervision authorities. At the same time the 12 remainingorganizations will monitor environmental planning, flood prevention and a nature protection. This new system is inaccordance with world standards, state secretary of Environmental and Water Ministry István Ori said. (Nv 4) G.R

Stockwatch

BUX index: BUX Close: 14707.83 Change: +182.59 (+1.26%)

Stock Closing price Daily change (%) Average price VolumeMOL 12,540 1.5 12,468 185,932Matáv 868 0 868 1,557,277OTP 5,665 2.1 5,632 1,017,912Richter 21,900 0.5 21,797 59,983Egis 11,000 0.9 10,999 66,144 Antenna 3,880 0.3 3,863 6,966

TVK 5,250 1 5,256 3,114Rába 695 -1.4 695 12,997BUX Close: 14707.83 Change: +182.59 (+1.26%)

Exchange


FIXED MIDDLE RATEEUR 1 245,79USD 1 183,19GBP 1 356,65

CAD 1 149,45CHF 1 160,4JPY 100175,81CZK 1 8,02PLN 1 59,01Weather

Tomorrow: cloudy

High 3°C (37°F)Low -2°C (28°F)

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20 December 2004Business

ÁPV to give Volán Ft 6 bln injection

The State Privatization and Holding Company (ÁPV) decided on Thursday to give state-owned Volán Rt's 23long-distance coach companies a Ft 6 billion cash injection - Ft 5 billion for coaches and Ft 1 billion for developments. The Volán companies may spend the money on new coaches, or used coaches which are nomore than eight years old. The purchases must be made in a public procurement procedure by the end of 2005.The bus companies operate 6,500 coaches with an average age of 12 years. ÁPV will evaluate the buscompanies' individual projects when disbursing the Ft 1 billion for developments. (Econews; Vg 5, MH 12, Ng 5)

Ganz wins new Kuwaiti contract

Ganz Transelektro Villamossági (GTV) Rt, a maker of heavy electrical equipment won an order from Kuwaiti stateto build a new, and extend an existing, electric substation. Contracting negotiations have been started with EnergyElectricity and Water Ministry of Kuwait; the value of the order will be about Ft 2.6 billion. The company has beenpresent in Kuwait for forty years; its largest contract was made last May in a value of Ft 3 billion. (NG 3) G.R.

Sykes gets Samsung tender

Sykes Central-Europe Kft won a Samsung tender to run call center services for the company's whole productrange in Hungary, regional CEO of Sykes, György László said. Sykes is about to train and employ 100 associatesin accordance with Samsung's conditions over the next two years. The first group has already been trained. Theregional center of Sykes in Budapest, and has 600 employees offering call center and customer serviceoutsourcing for companies like Nokia, Motorola, Malév, Hewlett-Packard, Elmu or Fogáz Rt. (NG 4) G.R.

Plans are begun for new shop. center

The planning of a new shopping center at the terminal of Millennium subway at Mexikói Street has begun. The

Euro 20 million investment will be carried out by Raiffeisen Real Estate Rt and will be finished in 2006. The 2.7hectares site is owned by public transport company BKV Rt and Raiffeisen will pay Ft 500 million for the utilizationright. BKV Rt will also get 1,500 of total 15,000 sqm useful area. The investment does not affect the subway-depoton the site and the nearby P+R parking lot will also be kept. (NG 17) G.R.

Malév faces structural changes

Majority owner ÁPV Rt called on Hungarian airlines Malév to reshape its business plan and take rationalizationmeasures in the company's extraordinary board meeting which took place at the weekend. A few flights willdefinitely be cancelled, Malév's fleet will be unified and the company should get away with older planes likeFokkers and its two large Boeings to save maintenance costs. The company might operate overseas flights incooperation with Delta Airlines, who would provide replacement for the two planes. (Vg 7) R.G.

Crystal factory halts production

Parád Crystal, a maker of hand-crafted crystal products, said Saturday that it was halting production on creditor demand, laying off 400 workers. Human relations manager Henrik Holló, who is also mayor of Parád, the village inN Hungary where the factory is located, said the company had a cumulative debt of Ft 300 million and creditorswere demanding liquidation, so the facility was closing down on December 21. He added his hope that thestoppage would be temporary, and the factory could resume operation on January 10. The Hungarian Investmentand Property Management company, which owns the factory, was recently sold by the government to Saye, aprivate company, though the change in ownership has not yet been registered. (MTI; Nv 5, MH 11)

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Taverna to invest Ft 2 bln in dev'mnt

Hotels and catering company Taverna Holding Rt plans to invest Ft 2 billion in developments next year in its hotelchain and restaurants, the company's CEO László Tárnoki announced. The most important improvements includerefurbishment of Hotel Liget, Hotel Taverna and Hotel Pilvax in Budapest in 2005. The developments will be

financed by loans and the company's own resources. Taverna Holding Rt expects to have Ft 386 million in profitand Ft 4.3 billion in net turnover this year. The hotel chain's occupancy rate increased from 65.8% to 69.9% in ayear. (Vg 5) R.G.

Paks undergoes major overhaul

Block two at Hungary's sole nuclear power plant, in Paks, S Hungary, was halted for a major overhaul onSaturday. The block had only been online since September after a disturbance in April 2003, qualified as aserious incident rating a 3 on the seven-grade International Nuclear Event Scale (INES), forced it to shut downbecause of damaged fuel rods, though the reactor itself was not damaged. The restart was permitted by theNational Atomic Energy Office with the caveat that it be halted in December for a scheduled once-every-four-years overhaul. The work is expected to take about three months instead of the usual 60 days, because a

cleaning tank near the reactor, usually used to house spent fuel rods, is out of service. (MTI; Ng 4)

MOL shares to float in Warsaw on Wed

Shares in Hungarian oil and gas company MOL Rt are likely to start trading on the Warsaw Stock Exchange onDecember 22. "This date of December 22 is probable but no final decision has been made yet," Warsaw boursespokesman Robert Kosowski told Reuters on Friday. MOL, with market capitalization of more than USD 7.3billion, will be the second Hungarian company listed in Warsaw after chemicals company BorsodChem, and thefourth foreign firm along with Bank Austria and U.S. drug maker Ivax (Econews; Ng 7)

GVH approves Forlev's Konzum buyout

The Competition Office (GVH) has approved Forlev Kereskedelmi és Tanácsadó Kft's purchase of a 46.06%stake in Konzum Kereskedelmi Rt, on the Budapest Stock Exchange's (BSE). Forlev raised its stake in Konzum ina public purchase offer between November 8 and December 8, 2004. The company now owns 64.08% of Konzum. Forlev paid Ft 90 per share, or 11.2% over the share's 180-day, turnover-weighted average, for the46.06% stake, which adds up to Ft 216.1 million. Konzum's shareholder equity was Ft 2.217 billion at the end of June. (Econews; Ng 7)

MTV to borrow Ft 4 bln

State television MTV Rt has applied for Ft 4 billion in loans to counterbalance the Ft 8 billion debt it amassed bythe end of the year, chairman Zoltán Rudi announced. The loan, warranted by the government, will come from anundisclosed financial institution. MTV had hoped for Ft 10.8 billion in subsidy from the central budget this year, butso far it only received Ft 4.8 billion. Rudi added that by curbing costs, the state television managed to save Ft 3

billion in 2004. (Nv 3) P.O.

OTP, MOL drive pre-Christmas rally

Leading stocks in Budapest chalked up new gains this week as investors were attracted to shares of OTP Rt andMOL Rt in a buying spree before Christmas. The upturn hit the market late on Monday and lasted throughout theweek with the BUX clocking higher every single session. A lower than expected inflation reading for November added support to the bulls amid relatively limited corporate newsflow. The BUX hit a succession of record highsand its Friday close, at 14,738.33, was a markup of over 4% compared to the previous Friday. (MTI; Ng 7)

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Economics

P'ment to vote on budget today

The Parliament will hold the final vote for next year's budget draft today. According to adopted amendments, theplanned budget deficit grew by Ft 20 billion even though planned revenue was increased by Ft 19 billion.Expected revenue from motorways built in public-private-partnership was increased from Ft 137.6 billion to Ft148.6 billion and revenue from infrastructure concessions is also planned to be higher by Ft 10 billion. Subsidiesfor municipalities were increased by Ft 16 billion to Ft 884 billion, the increase all goes towards educational andsocial expenses. The budget for financing redundancies was decreased from Ft 25.3 billion to 13.5 billion; butfurther Ft 8.4 billion will be spent on raising salaries. (NG 3) G.R.

"Economy would have collapsed without EU"

The Hungarian economy probably would have already collapsed if the country hadn't entered the EU, thepresident of the National Bank of Hungary said in a radio program yesterday. Speaking on Hungarian Radio'sSunday morning program Vasárnapi Újság, Zsigmond Járai called the current economic policy untenable and saidthat the country's Euro 40 billion national debt was about the same % of its GDP as it had been during the 1995

economic crisis, which triggered a series of austerity measures. "I don't believe creditors would stand for this higha debt level if we were not an EU member," he said, adding that streamlining government administration had to bethe first move towards correcting a policy he said needed a complete overhaul. (MTI; Vg 4, MH 11, Nb 13)

M5 technical survey tomorrow

The technical survey of works done in connection with dismantling the gates on the M5 motorway will take placetomorrow, announced Valéria Garai, spokesperson of AKA Rt. Along with those works, negotiations have beenunder way regarding the 3rd section of the motorway between Szeged and the southern border of the country setout to be finished by the summer of 2006. Ground works on the 2nd, 45 km section, between Kiskunfélegyházaand Szeged is almost finished, Garai also added. The section, the construction of which will cost Euro 365 million,is scheduled to be opened on Dec. 31, 2005. (Vg 4) R.G.

Games market winning

vThe Hungarian games market has expanded by an approximate 15% this year, according to industry experts.The market is largely dominated by hypermarkets holding a 65% share while small retailers can only survive byproviding unique games or professional sales staff providing expertise advice. Experts estimate sales aroundChristmas having an approximate 65% share in the annual turnover of the sector. The Hungarian toy producer'sshare in the market has decreased to under 10% in recent years as imports can be considerably cheaper thanraw material in Hungary. (Vg 1, R.G.)

Top tax payers must go online

From next year, all top 10,000 tax payers will have to file their tax returns electronically, compared to the currentthree thousand companies. In addition, one tenth of the biggest tax payers will have to get Internet access in thenear future to meet the requirements. The National Tax Office (Apeh) supplies the chip card, the device that readsthe card, and the software necessary for filing e-tax returns. The top 10,000 tax payers provide Ft 7,264 billion, or two thirds of the tax income of the central budget annually. (MH 1) P.O.

Construction industry output up in Oct

Construction industry output rose by 5.4% yr/yr in volume terms in October according to unadjusted figures, theCentral Statistics Office (KSH) announced yesterday. Working-day adjusted growth was 6.8% yr/yr; seasonallyand working-day adjusted output increased by 3.4% from September. The expansion was mostly driven bytransport-related investments. Volume of new contracts made was by 50% higher then in last October. Cost-based prices of the industry were by 4.5% up yr/yr. (NG 3) G.R.

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MOL to raise diesel price today

Hungarian Oil and Gas Company MOL Rt, the country's leading fuel distributor, will raise the retail price of dieselby Ft 1/litre today, a MOL spokesman said on Friday. The company explained the measure with a governmentdecree on seasonal changes in the tax content of fuel, reducing the excise tax subsidy for diesel by Ft 1, to Ft 4.

From next Monday, the retail price of diesel will be Ft 228/litre, MOL said. Retail petrol prices will remainunchanged, with a liter of 95-octane petrol selling for Ft 231.50. (MTI)

Politics

PM and Pope discuss new Europe

Prime Minister Ferenc Gyurcsány said his meeting with Pope John Paul II on Saturday had focused on the newEurope after the Brussels EU summit, Hungary's place in it. Speaking to the Hungarian media, the PM said thethird topic, was the role of the Hungarian Catholic Church. Here, he said, he had voiced his doubts and concernsto the Pontiff over the active role in public life and distinct positions taken by the Hungarian Catholic Bishops'Conference. (MTI; Nb 1, Nv 1, MH 8)

Domestic

Nagy wins super featherweight title

Hungarian boxer János "Bone-Breaker" Nagy won the vacant super featherweight title of the International BoxingCouncil as he beat his Argentine opponent Julio Pablo Chacon on points in Gyor, W Hungary, on Saturdayevening. With the victory, Nagy also acquired the right to challenge the world champion of the World BoxingOrganization. The match ended in the 10th round when Nagy unintentionally hit his opponent below the belt.Chacon fell to the ground and was unable to continue. The referee did not see the foul and eventually declaredthe Hungarian boxer WBO intercontinental champion. The ensuing dispute ended with a compromise between thetwo boxers' managers. They agreed that the outcome of the match would not affect the world ranking list. (MTI;

Nv 15,23)

Citizen looses 1930's bank deposit case

The Budapest Municipal Court decided in favor of the Finance Ministry in a case initiated by a Hungarian citizenwho placed a USD deposit in a Hungarian branch of the Hungarian-Italian Bank Rt back in the 1930's. Liquidationproceedings started against the bank by creditors in 1947 was only closed in 2003. The plaintiff claimed thataccording to a regulation taken effect in the 1950's, the Hungarian state should hold him harmless against theloss of his bank deposit. The court's decision is precedential in regard to the relating regulations not beingapplicable to bank accounts set up before 1945. (Vg 4) R.G.

Ukraine border wait up to 20 hrs

Trucks trying to enter Ukraine from Hungary at Zahony now have a 20-hour wait, a spokesman for the Hungariancustoms service warned yesterday. The delay, which began on Friday with an 8-hour wait rose to 13 on Saturday,is now up to 20, Jeno Sípos warned. Ukrainian authorities said their computer system had crashed, and thatvehicles had been trying to enter the country without official statements from importers declaring that they hadordered the goods. The combination of the two had triggered the delay, they said. Hungarian authoritiesrecommend that drivers obtain these documents before trying to cross into Ukraine, and say they hope Ukrainianofficials will get back up to speed today. (MTI)

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Stockwatch

BUX index: BUX Close: 14738.33 Change: +30.50 (+0.21%)

Stock Closing price Daily change (%) Average price VolumeMOL 12,690 1.2 12,630 402,734Matáv 867 -0.1 864 2,037,214OTP 5,640 -0.4 5,632 1,184,826Richter 22,000 0.5 22,041 106,344Egis 11,000 0 11,059 23961 Antenna 3,700 -4.6 3,866 129,523TVK 5,160 -1.7 5,207 18,621Rába 700 0.7 694 10,653

Exchange


FIXED MIDDLE RATEEUR 1 245,79USD 1 183,19GBP 1 356,65CAD 1 149,45CHF 1 160,4JPY 100175,81Weather

Tomorrow: p/cloudy

High -1°C (31°F)

Low -6°C (22°F)



Documents

7Days, 2004. december 20