Hungary brokerage troubles widen with Quaestor clampdown 

• Third brokerage in a row to face regulatory action
• Quaestor bond issues may have exceeded permitted limit – cbank
• Bond redemptions exceeded its liquid asset-Quaestor
• Investment firm asks for state help (Adds central bank comments, detail)

The National Bank of Hungary suspended the licence of brokerage Quaestor on Tuesday, citing regulatory shortcomings, and said the firm may also have issued many more bonds than permitted under its issuance programme.

Quaestor is the third Hungarian brokerage to face regulatory action within weeks. Hungary’s forint fell one percent versus the euro from its Monday closing level and dealers said the brokerage troubles had played into the falls.

State news agency MTI cited central bank spokesman Istvan Binder as saying a supervisor had taken charge of Quaestor’s brokerage as clients queued in front of a branch in Budapest.

Quaestor, which has been operating for 25 years, also provides banking, savings, investment and travel services to over 200,000 clients, according to information on its website.

Binder told Reuters there was suspicion Quaestor may have issued up to 150 billion forints more in bonds than the 60 billion forints permitted under its bond issuance programme.

“It is too early to speak about financial damage, as we don’t know if the value of assets covers the value of bond issuance,” Laszlo Windisch, a vice governor of the National Bank of Hungary, said on Tuesday.

The ruling Fidesz party said the government would discuss a possible strengthening of the central bank’s supervisory rights and parliament could pass any necessary amendments urgently.

Earlier this month, the central bank revoked the licence of brokerage Buda-Cash and four small banks linked to it, saying the brokerage could not account for about 100 billion forints ($354 million) of client cash.

Last week, the bank also revoked the licence of smaller brokerage Hungaria Ertekpapir.

The central bank said Quaestor could close open financial market positions, but clients’ access to securities and other assets had been suspended pending the inquiry.

Quaestor said in a statement one of its units, Quaestor Financial Hrurira, filed for bankruptcy protection after clients tried to redeem bonds in large quantities following the collapse of Buda-Cash. It said redemptions exceeded the liquid financial assets of the Quaestor Group.

“It is impossible to raise all the money needed to repay the bonds only with market tools,” it said. “Like several large banks, insurance firms and bond issuers in the world who had to ask for state help, we have done the same.”

Quaestor Financial Hrurira launched a 70 billion forint bond issuance programme in November for the 2014-2015 period, according to its prospectus on its website.

Source: Reuters – Hungary brokerage troubles widen with Quaestor clampdown

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