Despite a reduction in both the number of banks and branch offices in the past nine years, Hungary still has too many bank branches, Márton Nagy, vice-president of the Hungarian National Bank (MNB) has said.
Speaking at a conference organized by the Budapest Economic Forum, Nagy said that after Hungary introduced bank transaction charges in 2012, the number of banks has been reduced and the number of branches also dropped by around 30 percent, but there are still too many offices and the optimal functioning of the banking system could be ensured by 70 percent of the current branches.
He also said that banks have unjustifiably high costs relative to the size of their assets and the reason for this is still the too large number of both banks and branch offices. Considering the size of the country, Hungary should have five large banks, instead of the current 35 licensed banks, which Nagy said was “unrealistic”.
“The MNB would like to reduce the number of banks,” he said.
His presentation sparked a debate at the conference, with László Wolf, deputy CEO of OTP, Hungary’s largest commercial bank saying that a 30 percent reduction in the number of bank branches was not needed. He also said, however, that his own bank was closing ten branches this year.
József Vida, president-CEO of a small Hungarian bank, MTB (Magyar Takarékszövetkezeti Bank) said he supported the idea of the central bank.
OTP is by far the largest commercial bank in Hungary, with a market capitalization of HUF 1,312 billion (EUR 3.96 billion), more than the market capitalization of the next five banks combined.
Title image: ATM