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Economy minister would oust several foreign banks from Hungary, named those that can remain
Hungary’s National Economy Minister Márton Nagy has signalled plans to shrink the country’s roster of major banks to just five, naming four frontrunners and leaving a solitary vacancy. Days ago, in a speech, Prime Minister Orbán suggested that at least one foreign bank should leave the country.
Economy minister would oust foreign banks
Speaking at a conference hosted by the Ludovika University of Public Service on Monday, the minister endorsed OTP, MBH Bank, K&H and UniCredit to continue serving Hungarian customers, declaring the “fifth spot up for grabs”.
This is not the first occasion on which Nagy has aired such views. Just a day earlier, he reiterated that Hungary should cap its big banks at five—explicitly OTP, MBH, K&H and UniCredit, with that final place open to competition.
According to the Hungarian National Bank, seven large banks currently dominate the market. Alongside those named by Nagy are Erste and Raiffeisen, both Austrian-owned, and CIB, which is Italian-controlled. K&H and UniCredit are also Italian, while OTP and MBH are domestic outfits—the latter aligned with the interests of Lőrinc Mészáros, Hungary’s richest man and a close associate of Prime Minister Viktor Orbán, who collected most of his fortune under the Orbán government.
News website 444.hu reported that PM Orbán, in his recent State of the Nation address, branded Erste the “tax collector of death”—a barb suggesting the Austrian lender is unlikely to claim the contested slot.
Swedish, Austrian examples
In a Facebook post shared today, Nagy argued that fewer big banks are needed to drive down costs in the sector. He said a leaner industry with fewer institutions would be more size-efficient, while also spurring greater competition. Nagy cited international examples in support: Austria and Sweden each have fewer than five major banks.
It’s all about keeping Fidesz hands involved in every financial transaction in Hungary from which they will siphon profits for their corrupt pockets. The problem with foreign banks is that this corrupt government can’t get itself inside to take a percentage of transactions conducted. Keeping the books clean is all done independent of government corruption. Would anyone trust the books of MBH run by Meszaros or the big fish for corruption which is MOL? Any student of economics knows less competion means higher prices. Fees and interest rates on loans will go up and interest rates on deposits will go down. This is the same model Fidesz is using in every industry in Hungary be it construction, cement, and food retail. They aim to drive independent foreign companies out to be replaced by Fidesz controlled companies with opaque accounting from which they can corruptly enrich themselves.
Surely it’s up to a bank to decide if they wish to retain a presence in Hungary and continue to serve Hungarian customers? This goes to the very essence of what constitutes a free market economy. If 20 banks wish to compete on the local market, let them. Greater competition leads to lower prices for all as banks have to compete harder to win market share.
Governments have an important role to play in prudential regulation, ensuring that banks are adequately capitalised, are able to withstand market turmoil without endangering depositor funds and are adhering to local law and regulation, but the decision to offer banking services while remaining in compliance with local regs is entirely within the remit of the service provider.
Which bank does he want to promote, in which he has a financial stake?
Such a corrupt government!!