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January 12, 2012 7:06 pm
Hungarians bank on Austria to secure savings

Irta: Kester Eddy in Neusiedl

am See, Austria
Neusiedl am See, a market town in eastern Austria, boasts a healthy tourist trade. Lake Neusiedl, which straddles the border with Hungary, along with spas, architecture and wine cellars attract 90,000 guest-nights a year. But recently a new kind of tourism has developed.
“I get Hungarians coming in asking where the next bank is. It’s not extreme, but last night it was in the news that Hungarians are banking in Burgenland,” Rita Rittsteur, who manages the local tourist office, told the Financial Times.
Yesterday, only a handful cars with Hungarian plates were on the main street. But one local bank manager, requesting anonymity, confirmed the increase in Magyars with money.
“Actually, we began getting five to 10 enquiries every day from late 2010. It jumped to 20-30 a day in November. We’ve had seven new accounts opened today,” he said. “They don’t trust their government, and I don’t blame them,” he added.
Hungarians have become increasingly nervous after a sharp fall in the forint as markets lost confidence in the country’s ability to service its debts, and its sovereign credit rating was cut to junk.
Judit Lovas, a financial journalist who runs a financial information site for Hungarian consumers, said visitors to Neusiedl and other border towns were almost all there to “squirrel away” money.
“People are afraid. It’s not that they don’t trust the Hungarian banks – they do. But they don’t trust the state. Last year, the government nationalised the private pension funds. People say that was theft. Now they think [if the economy gets worse] one day, the government could steal their savings,” she said.
Viktor Orbán, Hungary’s prime minister, assured the public last week that the government had “nothing to do” with private savings, and depositors’ money “belongs to the depositors”.
But Hungarians have seen Mr Orbán’s centre-right Fidesz government pursue several “unorthodox” economic policies – including crisis taxes on corporate sectors, plus the pensions grab – since coming to power in May 2010.
These were supposed to plug a state budget hole while boosting growth, and the government insists this year’s budget deficit will be below 3 per cent of gross domestic product, with growth of 0.5 per cent. But markets became increasingly concerned by the country’s erratic economic policies, high state debt – about 82 per cent of GDP – and borrowing by Hungarians, particularly with two-thirds of mortgages in foreign currencies.
The forint fell 20 per cent against the euro from last summer to hit a record low of Ft324 last week, sharply pushing up forex mortgage servicing costs.
That finally prompted the government to repair fences with the International Monetary Fund in hope of obtaining a financial backstop. A Hungarian delegation met Christine Lagarde, IMF managing director, in Washington.
Istvan Karagich of BloChamps Capital, a Budapest-based financial consultancy, confirmed that Hungarians began quietly shifting funds abroad about a year ago.
“We talk to a lot of private bankers and collect the feelings. We know a lot of stories. Last winter and spring there were people moving sums of Ft30m-Ft70m out of the country,” he said.
Late last year, as the eurozone crisis and Hungary’s difficulties escalated, ordinary people began trekking abroad, mainly to Austria, but also Slovakia and Slovenia, in search of a haven.
Ms Lovas said the sums involved are often just €5,000-€10,000, or as low as €1,000. Often the motivation is emotional. “It’s very small amounts. Just think, it costs you Ft20,000 ($77) just to drive to Austria,” she said. But the flow of people is keeping Austrian bank clerks busy. “If you phone up to arrange a Hungarian-speaking bank clerk, you have to wait two weeks. Clerks [at one Neusiedl bank] said last week they worked without a break,” she said.
Neither OTP, Hungary’s largest retail bank, nor the Hungarian Banking Association would comment on savings withdrawals.
The Hungarian Financial Supervisory Authority said “News on the withdrawal of the deposits in Hungary has no factual basis.
“According to HFSA daily liquidity data, received from the banking sector, deposits are not decreasing.” Mr Karagich estimated that €150m-€300m left the country in the past two months but said “in Vienna, the talk among bankers is of €350m, about 90 per cent of that to Austria alone”.
He said compared with total Hungarian bank deposits – worth €50bn according to October data from HFSA – the monies leaking across the borders were not significant, so far.
“Hungary is not Greece or Ireland. There is no need to panic, provided this does not accelerate. This is manageable if the government makes changes [to restore confidence].”
Ms Lovas said an IMF agreement was crucial to regaining public trust. This taking money across borders, it’s absurd. It’s as if we have stepped back 20 years,” she said.
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About Drolgalazin

Dr. Olga Lazin is a prolific Historian and Author. A UCLA graduate in History, Dr Olga is a Professor of American Constitutional and Globalization history at CSUD. She is also a published author and History Lecturer. Read her eye-opening books, download here: You can access and download her books at: In Hard copy: Globalization is Decentralized: Easter Europe and Latin America Compared, Civic And Civil Society, Foundations And U.S. Philanthropy, published 2016 Author HOUSE, USA. Book: She has been teaching History at UCLA, Cal State University Dominguez Hills, Cal State University Long Beach, as well as University of Guadalajara (UDG) and University of Quintana Roo, in Mexico for over 26 years. Her specialty is History of Food, Globalization of technology, food History, and the American Constitution. As a hobby, she is practicing permaculture. Her radio show is accessible 24 hours a day at: FACEBOOK: OLGA LAZIN DROlga Lazin Twitter; @olgamlazin Instagram; #lazinolga E-mail;
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