Hungary tells banks: shape up or ship out
Foreign banks are finding it hard to make their operations in Hungary pay. They say they are still committed to the country. So what will they make of the finance minister’s public call for consolidation?
Recent years have not been kind to Hungary’s embattled foreign banks, and the pain isn’t over yet. Since premier Viktor Orban swept to power in 2010, lenders have been hit by a brace of new taxes – one directly targeting profits, the other carving a slice out of every financial transaction – as well as a relief scheme for mortgage borrowers.
Caught in the state’s crosshairs, some foreign banks have understandably opted to siphon capital out of the country and sequester it in more industry-friendly jurisdictions.
That has further infuriated a populist government. Desperate to encourage banks to lend more, to foster growth and boost spending, it is now pressing foreign banks to answer a simple question: Are you in or out?
|Some consolidation needs to take place. A system of seven or eight large banks, each with 6% to 8% market share, is unsustainable
Gábor Orban, financial policy minister
“We would prefer [foreign lenders] to leave rather than to stay and be zombie banks,” financial policy minister Gábor Orban told Euromoney in December in Budapest.