A SUPPLEMENT TO EUROMONEY/APRIL 1998: EASTERN EUROPE
Hungary is beginning to reap the reward for its decision to clean up the balance sheets of its leading banks and then sell major stakes to strategic foreign investors. That strategy is now nearing completion - of the major institutions only Postabank is still in the public sector and almost all of the others are partly or wholly owned by international banks. The result has been a dramatic revival in an industry that only three years ago was near collapse and was, say bankers, "suffering from a lack of internal controls and audits and damaged by corruption and loans made against kickbacks from borrowers". The sale to foreign owners has provided an influx of fresh capital and a significant investment in technology. There is tougher competition and more dynamic management while the introduction of western banking systems and controls is starting to mean fewer poor-quality loans, more efficient services and fewer but better trained staff.
Corporate customers are already benefiting as the local banks vie for business with international institutions that set up new operations in the late 1980s and early 1990s.