On January 15,2015, the Swiss National Bank surprised the markets by removing the 1.20 euro exchange rate floor for the Swiss franc, despite prior communications suggesting otherwise.
As a result, the Swiss franc appreciated by 30% against the euro within minutes, while the Hungarian forint weakened sarply. Global currency markets froze for hours, with trades either not executed or filled at unpredictable rates. The OTP Supra Derivative Fund, one of Hungary’s most popular absolute return funds, held a significant EUR/CHF long position. Consequently,the strengthening of the Swiss franc caused the fund’s value to drop by more than 18%, wiping out two years of gains. This represented one of the largest exposures to the Swiss franc in the Hungarian market. Managing HUF 115 billion in assets, the OTP Supra Derivative Fund was Hungary’s largest absolute return fund and a key product of OTP Fund Management.
Our primary objective was to avoid mass with drawals from the Fund, maintaining both client confidence and the trust of our institutional partners, ensuring they wouldn’t shift to promoting competitor products to their customers. In developing our communication strategy, we relied on the crisis communication plan designed for OTP Bank.
Thanks to a bold, proactive, and swift action, we successfully prevented withdrawals from the Fund and preserved the strong reputation of OTP Fund Management. Our fact-based approach was carefully crafted to minimize panic, starting with the language we used:
• Instead of calling it a loss, we referred to it as a price decline.
• We emphasized that similar value drops had occurred before in the fund’s history,as fluctuations are sometimes unavoidable with high-risk derivative funds. Yet,we’ve consistently been able to recover from these drops and bring the fund’s performance back into the positive, making it unwise to withdraw funds now.
• We positioned OTP Fund Management as a victim of the situation, as it was triggered by a completely unexpected decision from the Swiss National Bank that went against prior communications—something beyond OTP Fund Management’s control.
We decided on rapid, proactive communication to ensure the media adopted the above messages as soon as possible.
1, We sent an emergency newsletter to all relevant distributors on the day the incident broke, and we published the information on the Fund Management’s website for investors to see;
2, Key journalists received a holding statement,where we clearly outlined the price decline and conveyed our key messages.;
3, In the following days, the Fund Management team personally visited distributor partners to further reinforce our position
OTP Fund Management stood out as the only market player to proactively and transparently address the issue. This led the media to adopt not only our messages but also our phrasing in their reports, along with the additional insights we provided. Several outlets highlighted OTP Fund Management as a positive example for its prompt communication with investors. Negative mentions of the OTP Supra Fund ceased within two days following the central bank’s decision. Once the initial panic subsided, both institutional and retail investors felt reassured, and OTP Fund Management saw no unusual capital withdrawals. As expected, the fund’s value recovered within 2-3 years.
