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Already under mounting pressure due to the government's search for a "solution" to the problem of foreign-currency debt, Hungarian banks saw their share prices plummet on July 19, as it emerged that the CEO of the country's biggest lender - OTP - had sold holdings worth over €26m. Several other executives also dumped their OTP shares over the previous week.

OTP's share price fell by as much as 14% at one point, with turnover on the Budapest bourse spiking. The stock closed 7% lower, to bring total losses to 14% over the three days since a government official said Budapest is mulling legislation aimed at contracts between banks and households with forex loans. The last programme that Prime Minister Viktor Orban rolled out to help forex borrowers saw the banks forced to shoulder huge losses, as Swiss franc and euro debt was paid off at exchange rates far below the market.

The sale by Sandor Csanyi - chairman and CEO of Hungary's largest lender, which is a rarity in being locally owned - of close to HUF7.8bn (€26.42m) worth of shares in the bank clearly raises questions for investors, not only over the likely damage OTP is set to suffer under any new action on forex debt, but also suspicion of insider trading. Over the past couple of months, several senior executives and board members have sold OTP shares, according to portfolio.hu.

OTP released a statement claiming Csanyi sold the shares to raise funds to invest in an agricultural and food business he also owns. The CEO sold all but 10,000 OTP shares he held personally on July 18, the Hungarian portal reports. Owned by the banking chief, Bonitas 2002 Zrt. also divested a substantial part of its OTP shares. Overall, he released 1.7m shares onto the market. According to brokerage Equilor, the market is now "more curious about his unofficial stake (held by friendly parties) which is rumoured to have been stagnating around 25-30%."

Justice Minister Tibor Navracsics said late on July 17 that the government intends to find a solution to the ongoing forex debt issue, which is one of the last brakes on its "unorthodox" policymaking. Hundreds of thousands of Hungarian households took out mortgage loans in Swiss francs and euros in the years before the 2008 crisis thanks to the strength of the forint at the time. However, the Hungarian currency has dropped dramatically since, leaving borrowers facing huge monthly payments. While Budapest is clearly happy to ignore complaints from Brussels over its policies, upsetting the markets risks sending those borrowers sliding into default.

On July 18, the market was still trying to decipher the vague statement from the justice minister. Officials have since clarified that Budapest is looking to alter debtors contracts, which will likely hit the banks for billions. At the end of March, OTP's forex mortgage stock amounted to HUF801bn. While worries over the scheme had seen OTP stock lose some ground, the likelihood of insider trading added momentum. The rush to dump the stock was so intense that OTP accounted for almost all the volume on the Hungarian exchange, Reuters data showed. The bourse had to briefly suspend trading in OTP shares.

"The timing of the transaction is strange, as it is just before the decision of the government on the FX loan relief plan scheduled for Wednesday," notes Erste Bank. "Although details are unknown yet, but in worst case in our approximation, the new legislation may cause a huge some HUF30bn loss for OTP for the next 12 years, meaning some HUF700-800 negative effect in valuation. In other words, the possible negative effect has been priced in."

Following the drama, local press claimed Csanyi is set to step down from his post at OTP due to health concerns. The lender's press office denied the CEO is set to leave the bank on July 21.