K&H Equities said the losses, similarly to previous year’s losses, are connected to the embezzlement case in 2003, in which the brokerage’s former broker Attila Kulcsár is suspected to have used deposits and investments of clients, including state-owned firms. The brokerage has put aside HUF 11.4 billion as a special reserve to cover possible losses of clients affected by the fraud. Auditor Ernst & Young Kft. has earlier stated that the outcome of the investigations is still uncertain and the final bill could exceed the HUF 11.4 billion. K&H Equities made HUF 9 billion in losses in 2003.

The brokerage has requested help from its parent company, commercial bank K&H Bank Rt. Subsequently, the brokerage’s HUF 8.2 billion negative balance sheet came into the positive sphere.

According to E&Y, future of K&H Equities greatly depends on whether its parent bank will help out the troubled brokerage in the future. HVG was told by K&H Bank’s press department that the bank is ready to provide help, if the brokerage needs it in future.

With an 11.5% market share based on revenue, K&H Equities is the fifth largest brokerage operating in Hungary.