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Hungarian competition regulator starts banking market probe

Hungary's Competition Office said it started an investigation of the country's banking market to determine whether lenders make it too expensive for individual customers and small businesses to switch to a competitor.

The Budapest-based regulator started the investigation February 7, it said in an e-mailed statement today. It was prompted by international examples and the office's own experience, the press release said. Hungary's retail banking market is dominated by OTP Bank Nyrt, the country's former monopoly lender. Its biggest rivals include the local units of Austria's Erste Bank AG and Raiffeisen International Bank AG.

They may be using their market position to deter competition, the regulator said. „Changing banks is rare for certain products on the retail and small business banking market,” the regulator said. „The substantially increased market power of the banks may make it feasible to keep some consumers captive and to create an unusual degree of advantage using this favorable condition.” The charges for switching to a rival bank may be high enough in some cases to outweigh the potential gains from a more favorable product, according to the regulator. (Bloomberg)