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Police have opened an investigation into the National Bank of Hungary (NBH) over accusations that it has illegally provided the International Monetary Fund (IMF) with confidential information, the chief prosecutor's office announced on February 21. The move comes as NBH Governor Andras Simor - a staunch enemy of Prime Minister Viktor Orban - is set to leave office in a couple of weeks.

The probe was sparked by Hungary's State Audit Office (ASZ), which said in a recent report that the NBH had shared confidential information with the IMF on domestic banks. "The investigation was ordered on suspicion of abuse of authority and violations of rules on business secrets," Bettina Bagoly, the prosecutor's spokesperson, said in a state television interview, reports AFP.

Suspicions of abuse of authority and "other crimes" were quoted by the police press service in a statement, according to Bloomberg. In a statement to MTI, the NBH rejected the auditor's findings, insisting that the bank's operations were lawful and that it's "puzzled" by the probe.

In the run-up to the end of Simor's term on March 3, the NBH has clashed with ASZ at lease twice in the last fortnight in a spat that has been building. The ASZ is charged with overseeing spending by public institutions. Like the central bank, it is independent from the government.

Earlier this month, the ASZ published a study criticizing the central bank's management of its reserves. Last week, in a scheduled report, it said the NBH had overstepped its authority by handing over data on the country's commercial banks to the IMF without their written permission. It also expressed concern over data-storage practices between 2009-12. Earlier this week, Simor called the accusations part of a personal attack designed to pave the way for his successor.

The ASZ is currently headed by Laszlo Domokos, a former deputy for the ruling Fidesz party who was nominated to the post by Orban in 2010. The tension between it and the NBH shadows wider worries in the markets over who will replace Simor. The government, which has been pushing the NBH since it came to power in 2010 to ease monetary policy, has said it will not announce its candidate until March 1. Economy Minister Gyorgy Matolcsy, credited as architect of Budapest's "unorthodox" economic policies is the nightmare candidate for the market, and the hot favourite.