Erste Bank Hungary to lay off staff, close branches

Erste Bank Hungary will lay off around 15% of its staff, or approximately 400-450 people, in the early months of 2012 and is expected to close down 43 branches, the bank said on Friday.

The bank said the lay-offs were required by its limited revenue outlook resulting from the economic crisis, the decline in lending as well as the government’s bank levy and early final repayment scheme.

The combination of the adverse external economic developments, the slowdown in the banking market and the substantial increase in risk-provision obligations has made it unavoidable to restructure Erste Bank’s Hungarian unit and streamline its branch network, CEO Radovan Jelasity said in the statement.

Conditions for long-term sustainable operations can be created only through cutting expenses and tight cost management, Mr Jelasity said.

Radovan Jelasity emphasised that parent company Erste Group continues to maintain its commitment to the Hungarian market and customers, however, due to the slowdown on the banking market, it needs to reassess its mid-term outlook in Hungary and restructure its business strategy accordingly.

The restructuring process comprises more than just lay-offs and will include a comprehensive renewal from strategy through customer relations to risk management. The lending-based growth of earlier years will be replaced by banking operations focusing on raising liabilities and based on the efficient exploiting of customer relations. The main goal is for Erste to become the main bank for its close to 900,000 Hungarian customers, the statement said.