Will they, wont they? The question is all the buzz in Budapest at the moment as it has long been rumoured that two US-owned banks in Hungary will quit the city. Now the buzz about GE Money’s Budapest Bank and Citibank Hungary is at fever pitch. According to local bankers, US investment banks are touting these banks around the existing larger players in Hungarian banking, in particular OTP, Raiffeisen and Erste. One banker went so far as to say that the US parent of one of the two banks had hired Goldman Sachs to sell it.
Local banks say they do not understand why the US banks stay in so peripheral a market, in the centre of Europe, with a small population of just 10 million and a slow-growing gross domestic product (GDP). Budapest Bank has a niche client base of small and medium-sized enterprises (SMEs) and retail clients, while Citibank offers some treasury products to larger corporates and issues credit cards. They each have about 5% of the entire market and prop up the table of substantial players in the market. The Hungarian market is dominated by OTP, which has about 30% of market share. Raiffeisen and Erste have about 10% of the market each. Other significant players are CIB and UniCredit.
