Hungary’s postal service is counting on its alliance with savings cooperatives to set up the nation’s largest network in the banking industry, where Prime Minister Viktor Orban has sought to increase the weight of local players.
Government-owned Magyar Posta Zrt. is teaming up with more than 100 savings cooperatives, state development bank MFB Zrt. and FHB Jelzalogbank Nyrt., a mortgage lender, to string together more than 3,500 service points that will offer a full suite of financial services by 2018, Chief Executive Officer Zsolt Szarka said in an interview on Wednesday.
“In terms of network size, we will be the largest player on the Hungarian banking market and our goal is to gain a significant market share in terms of business volumes as well,” he said.
Orban’s government, which has also striven for hegemony in the energy industry, has raised domestic banking ownership to boost lending, agreeing to buy two commercial lenders last year. The Magyar Posta alliance offers fresh competition for market-leading OTP Bank Nyrt., the country’s largest listed company.
The group will use its scale to cater to every type of economic agent nationwide, Szarka said.
Magyar Posta will focus on retail clients, with MFB reaching out to companies and savings cooperatives targeting small- and medium-size businesses and households even in the most remote corners of the country, Szarka said.
“There are over a thousand smaller settlements in Hungary where the postal service or a savings cooperative is the sole provider of financial services,” he said.
Magyar Posta, which already distributes banking products offered by FHB and set up a joint investment company with the lender, aims to boost the number of bank accounts it manages to 100,000 within the next two to three years from 43,000, Szarka said. Members of the alliance have started to consolidate their networks and aim to wrap up the process by 2018, Szarka said.
Savings cooperatives manage over 1.5 million deposit accounts at more than 1,600 units nationwide, according to data posted on the website of Takarekbank Zrt., which acts as the central bank of the cooperatives.
OTP operates almost 400 branches and caters to more than 4 million individual, corporate and institutional clients, according to data from the lender.
OTP’s shares have gained 51 percent so far this year, outperforming a 36 percent increase in the benchmark BUX index, propelled by Orban’s pledge to cut Europe’s highest banking tax from 2016.
Foreign bank units in the country include Erste Group Bank AG, Raiffeisen Bank International AG, UniCredit SpA, Intesa SanPaolo SpA and KBC Groep NV. The state acquired GE Capital’s Budapest Bank and Bayerische Landesbank’s MKB Bank to raise local ownership in the banking industry above 50 percent. The cabinet has also agreed to purchase a 15 percent stake in Erste’s local unit.