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Pension restructuring hurts banks’ profitability

The extraordinary tax imposed on the financial sector had a negative effect on the Hungarian bank sector last year, but that was not the only factor that contributed to the shrinking profits of banks, according to news portal napi.hu.

The extraordinary tax imposed on the financial sector had a negative effect on the Hungarian bank sector last year, but that was not the only factor that contributed to the shrinking profits of banks, according to news portal napi.hu.

Anaylsts find hunderds of billions of forints dissapearing from the sector as a result of the elimination of the mandatory pension funds even more worrying. Due to the rechanelling of private fund assets to the state basket, about HUF 420 billion in resources will dissapear from the banking system – this is the amount pension funds have kept at banks in form of deposits or investment notes.

One of the consequences might be the closure of several branches, a recent analysis by the Hungarian Banking Assocation says. Last year, 49 branches closed down, and analysts expect this number to grow significantly this year.