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Private capital outflow from Hungary may increase

Hungarian deposits abroad may increase by HUF 40 billion this year, István Karragich, CEO of Blochamps Capital told business daily Világgazdaság on Wednesday.

According to estimates, the sum of the capital flowing out of the country over the past years may have reached HUF 200 - 320 billion forints and the number of clients about ten thousand people. At the same time, the total number of private banking accounts in Hungary rose from 20,000 to 44,000 between 2005 and 2010, with about 2.2 to 2.4 accounts per clients on average.

The total capital managed in private banking rose from HUF 1,000 billion to HUF 2,400 billion over the same period. Karragich estimates this to increase by HUF 200 billion and the number of accounts to rise to 2,000-3,000 over the next two years.

The Hungarian market is saturated, however, and there is no room for expansion for Hungarian private banking providers. Turnover may increase, but growing competition is driving down profits, and recent tax law changes are not leading to a significant rise in incomes to increase the number of clients.

Also, commercial banks’ parent companies are redirecting clients with liquid assets above HUF 100 million - 200 million forints to themselves. Karragich predicts consolidation in the sector and the competence of advisors becoming more important.