Banking - Consolidation of Banks

The banking industry of the past years has been characterised by considerable liquidity difficulties of the Hungarian banks. In order to improve this situation and in preparation for the privatisation of banks, a consolidation programme has been initiated.

A parliamentary fact-finding committee consisting of eight members shall scrutinise the governmental consolidation of banks during the past years. The consolidation of the banks which was initiated in 1992 and implemented in several steps has been under fire from the beginning. The programme which cost the state an overall amount of 385 billion Ft will incur further extraordinary budgetary burden in the next few years.

14 banks and 68 saving cooperatives took part in the first consolidation phase 1992. During such phase, consolidation loans amounting to 98,4 billion converted into bank claims in the amount of 119,8 billion Ft. By reason of a further capital increase with respect to eight banks in 1993, the state became the