Three banks have already signaled that they do not wish to operate in Hungary for the long term, and one or two other lenders may not be able to stay in the country in the future, either, he said.

Scheerlinck explained that buyers of banks are generally drawn by a 15-20% rate of return on their investment, but such a rate can only be achieved if GDP growth reaches 2%. “This level of profitability is not expected, thus we don’t count on any significant consolidation in the coming 1-2 years,” he added.

He said the economic environment in Hungary had been unpredictable for market players since 2010 — the year the bank levy was introduced — and the lack of confidence made planning for the long term difficult. Banks’ ability to lend to borrowers in the real economy must be re-established, he said, urging the bank levy as well as other burdens on banks to be ended. Scheerlinck said return on equity in the Hungarian banking sector had been extraordinarily low in recent years.

OTP, K&H, UniCredit and Budapest Bank have been the only big players to maintain profitability, while foreign-owned lenders have received close to HUF 600 billion in supplemental capital from their parent banks, according to Scheerlinck.