Hungary to phase out state grants for building societies

In an accelerated procedure, Parliament is expected to debate and vote on the phasing out of state support for building societies. The proposal was put forward by Erik Bánki (Fidesz) head of Parliament’s Committee for Economic Affairs.

Bánki said the reason for the proposal was that while building societies received massive state support over the past four years, none of that was passed on to their clients and very few apartments have been built as a result.

In the 2015-2018 period the budget supported Hungary’s four building societies with a total of HUF 218.4 billion, but yields on building society deposits remained minimal and would been negative without state support. This year’s budget alone has HUF 71.1 billion earmarked for supporting building societies.

Despite the minimal benefits for their clients, the three largest building societies (owned by Hungary’s OTP, Austria’s Erste Bank and Germany’s Bausparkasse Schwäbisch Hall) posted a combined after-tax profit of HUF 67.7 billion over the same period in the past four years.