Töröcskei: Rumor killed RBI deal, Hungary not fascist
In an interview with Austria-based Der Standard, Government Debt Management Agency (ÁKK) CEO/Széchenyi Bank shareholder István Töröcskei expounded upon topics such as the banking environment in Hungary, international perception of the country and most importantly, why the rumored buyup of Raiffeisen’s Hungary-based business fell through.
An extrapolation of the interview runs below.
Der Standard: Most banks in Hungary have been taking losses for years. Why did you want to acquire Raiffeisen in Hungary?
Töröcskei: Hungary's banking sector is becoming increasingly interesting. After the wave of privatization in the 1990s and after the economic crisis, the country must be reorganized. There are many micro-enterprises, particularly in agriculture. And a few multinationals have settled here. But in the middle is a gaping hole: There are only a few medium-sized enterprises in Hungary. Thus, the economy is regaining strength and the smallest companies must become genuine SMEs. They need capital and credit and thus a kind of customer-oriented banking system which does not exist in Hungary.
Most banks in Hungary are foreign-owned. Prime Minister Viktor Orbán wants to radically change this. What would be the advantage?
The concept is not directed against foreigners. Foreign investments are welcomed [in the banking sector] as in the case of market leader OTP. But the corporate headquarters should be located in Hungary. In 2008 and ’09, we saw what happens when that is not the case: In a crisis, first of all, everyone tries to get one’s own share in order. The foreign owners have focused on saving the parent banks and addressed the problems in Hungary too late. This has led to a loss of time in cleaning up the economy.
So it’s not about the nationalization of the banks.
No. The primary goal must be to attract private Hungarian investors. The state can help to bring this process in motion.
Hungary's banks pay a large special tax; Raiffeisen and Erste were particularly up in arms about these fees. Do you see a hostile investment climate in Hungary?
No. The government in 2010 and 2011 requested all to take part in helping ensure that the country did not go bankrupt. Such fees logically can only be placed on those who have money.
A [bank representative] would probably complain that though paying the special tax, a profit is not being made.
But even banks that now enter the market must pay the special tax. They cannot just take the money home, as opposed to the established institutions in the years before the crisis that made lush profits. For banks from the 1990s until the crisis, Hungary was one of the most profitable markets. I see the bank tax as a contribution toward ensuring that the country stays on its feet.
If Raiffeisen Hungary were sold for €1, as one rumor speculated, would it have been worth buying despite ongoing losses?
We have seen the Raiffeisen [situation] very positively. The whole thing was hastily leaked to the public and that is in part why things turned out the way they did. That is all I wish to say about Raiffeisen at this time.
Could be something still come of the deal?
Is Hungary presented too negatively abroad?
We have succeeded in Hungary in such a way that we are regarded as a fascist country abroad. Before my son came home for Christmas from Hamburg, he was asked where he was going. When he replied Hungary, the response was “You’re not afraid in a fascist country?” This is utter nonsense. Some have deliberately painted a false picture.
But in Hungary, Jobbik, an anti-Semitic and racist movement is the third-strongest party in the country with upside potential.
Such parties are found almost everywhere in Europe. And compared with the extreme right in France, Jobbik would be considered much more sound.
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