Ten Hungarian banks failed within one year

A couple of days ago George/György Lázár, a frequent contributor to Hungarian- and English-language publications, wrote a witty article in Galamus with the title “Isn’t it odd? Only Hungarian-owned banks go under.” Indeed, Lázár is correct. Since January 2014 ten banks had to be liquidated, and all ten were owned by Hungarians.

The first to bite the dust was the Körmend és Vidéke Takarékszövetkezet, which had to close its doors in January 2014. The Hungarian National Bank fined the bank’s former president and chief operating officer fifteen million forints for his irresponsible handling of the bank’s affairs. Taxpayer money was used to make the bank’s depositors and creditors whole.

A few months later, in June 2014, the largest credit union, the Orgovány és Vidéke Takarékszövetkezet, went bankrupt. Today Imre G., the credit union’s chief operating officer, and two other employees of the bank are in custody.

In August the Alba Takarékszövetkezet lost its right to operate. The bank was woefully short on capital, and the Szövetkezeti Hitelintézetek Integrációs Szervezete (SZHISZ), the supervising authority of the credit unions, found serious irregularities in the everyday running of the bank.

In November the operating license of the Széchenyi István Hitelszövetkezet was withdrawn. The bank had been losing money for years. The regulators told the bank’s managers to raise capital, which, it seems, they were unable to do.

In December the Tisza Takarékszövetkezet had to end its activities after the regulators found serious irregularities in the conduct of the management.

If you think that only Hungarian credit unions have financial problems, you are wrong. The Hungarian National Bank withdrew the operating license of the Széchenyi Kereskedelmi Bank on December 5, 2014, an event that even Bloomberg reported. The owners of the bank were István Töröcskei (51%) and the Hungarian state (49%). Töröcskei’s name cropped up earlier in the case of the Széchenyi István Hitelszövetkezet, at which time certain opposition politicians demanded that he resign his post as head of the Államadósság Kezelő Központ (ÁKK), the office that manages the country’s debt load. At that time, however, Töröcskei convinced his superiors that he had nothing to do with the demise of the credit union, of which he was “only a trustee.”

The Széchenyi Kereskedelmi Bank has a colorful history. It was established in 2008 in the Cayman Islands as SPE Bank, with two billion forints in capital. In 2010 the original owner sold the bank to István Töröcskei and Imre Boros, who changed its name to Helikon Bank and, a month later, to Széchenyi Bank. Imre Boros had worked for years in the Hungarian National Bank during the Kádár regime. After 1990 he became a member of the Magyar Demokrata Fórum (MDF), and since the first Orbán government (1998-2002) was a coalition government, he became minister without portfolio. In 2002, after revelations that he was an agent employed by the secret service of the Kádár regime, he was dismissed from the party. Nowadays, Boros is a weekly participant in a program on the extreme right-wing Echo TV, where he masquerades as an economic expert. I should add that Töröcskei is part owner of Echo TV. In the summer of 2013 the Ministry of National Economy, i.e. the Hungarian state, bought a 49% stake in the bank for three billion forints. A year and a half after the Hungarian government found the investment so enticing, the bank went belly up.

István Töröcskei was a favorite of the current government. Why? Well, it all started back when Töröcskei was part owner of Széchenyi Hitelszövetkezet. He gave a sizable loan to Viktor Orbán to start his football academy in Felcsút. Ever since, Orbán has been supportive of Töröcskei. First, he made sure that he was appointed to head ÁKK, then he allowed him to convert his credit union into a bank before the nationalization of all the credit unions. And he allowed the ministry of national economy to sink three billion forints into Töröcskei’s bank.

István Töröcskei / Source: Magyar Hírlap

István Töröcskei / Source: Magyar Hírlap

On the surface everything seemed all right. The bank was growing rapidly. In addition to the three billion forints from the Hungarian government, the Hungarian National Bank “pumped” fifty billion forints into  the Széchenyi Bank in the form of low-interest loans that the bank passed on to its favorite customers, including companies owned by Töröcskei and his business associates. HVG listed a number of such companies in an article published on December 16, 2014, but it was only today that the Hungarian National Bank announced that they have turned to the police to investigate because of the suspicion that the problem at the bank is more than inept management. It may involve criminal activity. Whether Töröcskei ends up in custody, like the chief operating officer of the bankrupt Orgovány és Vidéke Takarékszövetkezet did, we will see, although I doubt it. Töröcskei is far too close to the prime minister to suffer such a disgrace. Orbán is a loyal friend and usually takes care of his own.

The last four banks György Lázár listed are all affiliated with the Buda-Cash Group: ÉRB Észak-magyarországi Regionális Bank, DRB Dél-Dunántúli Regionális Bank, BRB Buda Regionális Bank, and  DDB Dél-Dunántúli Takarék Bank. I wrote about them on February 26.

All these bank failures cost Hungarian taxpayers billions and billions of forints. In some cases, the depositors themselves will suffer great losses because their deposits exceeded 30 million forints, the limit the bank law guarantees. During the lean years after 2008 no foreign-owned bank in Hungary was in trouble because the German, Austrian, and Italian banks kept filling the coffers of their affiliates in Hungary. In the case of Hungarian banks, this is not possible. The Hungarian government is on the hook. As we know, the Hungarian State not only bought a 49% stake in Széchenyi Bank but also purchased outright the Bavarian-owned the MKB Bank, which right after the purchase turned out to be in financial trouble. The Hungarian state had to prop up the bank to save its customer deposits.

It is one of Viktor Orbán’s manias that the majority of the banks in Hungary must be in Hungarian hands. Lázár recalls that Fidesz’s parliamentary delegation in early January called upon the government to acquire even more banks because the “foreign banks are dishonest.” Antal Rogán, head of the Fidesz caucus, accused the “Gyurcsány party” of wanting to prevent Hungarian owners from acquiring banks. “Banks in Hungarian hands offer security for Hungarian families,” Rogán claimed. Lázár points out that just the opposite is true. Prudent Hungarians would do well to avoid Hungarian-owned banks and deposit their money in the banks of the “dishonest” foreigners instead.

Sort by:   newest | oldest | most voted

“It is one of Viktor Orbán’s manias that the majority of the banks in Hungary must be in Hungarian hands.”

Yes, because he wants to have his hands on the money. Nothing is better to support faithful cronies than state-owned banks. If the money runs out, the little guy pays (depositors/tax-payers). You can’t play these games with foreign-owned banks. It is also easier to mislead the Hungarian public than shrewd foreign investors.


An article published in Forbes last year is largely consistent with the analysis Eva just provided but it links the predicted problems in the banking sector to the Hungarian Supreme Court decision relating to extended foreign-currency mortgage loses which Eva’s essay doesn’t do.


Great link. Let’s not forget that this is a problem that OV inherited and it is a problem created by banks dealing with a population that was not properly protected from irresponsible banking practices nor educated on simple financial facts. I’m not sure that most people understand the relative magnitude of the problem in Hungary. Relatively speaking the problem here is far worse and more pervasive than it was in the US. The social and economic fallout from this crisis has been huge but it would have been bigger had defaults were treated like they would be in normal times. Think Greece but most likely worse. We can bicker about details but the first thing to know is that there are no good solutions here… For anyone, not the government, nor the banks, nor the citizens of Hungary. Just ask anyone in Hungary trying to sell a home today what this means to them. The banks will moan and they will stop providing loans but let’s not forget that the banks are required to hedge any loan positions in case they don’t perform which means that current losses were covered by past profits. A loan may have been put on… Read more »

We bought a flat 10 years ago for 15m Ft – as an ‘investment’.

House prices collapsed almost immediately afterwards (when state subsidies to first time buyers were withdrawn) and don’t seem to have changed much since. So, if we could sell our flat, we’d be lucky to get much more than we paid for it.

Additionally, the £ was at 350 Ft when we bought the flat, it’s currently at 420 – so the flat cost us £43,000 and would now sell for £36,000 – if we’re lucky.

And I dread to think what we’ve lost if we also factor in Hungarian inflation over 10 years!

Some investment.


“….this is a problem that OV inherited…”

Don’t let OV get away with that lie. I don’t know about Buda-Cash but I know that it was OV who nationalized (confiscated) the savings unions, transformed them into banks and reprivatised them (distributed them among those who were friends at that time). He gave the banks in the hands of people that he must have known could not be trusted with money.

According to Pester Lloyd 150.000 private depositors, 80 municiplities and 6000 copanies are embroiled in the chaos created by the banckruptcy of the so called Buda-Cash related banks which are really OV related banks.


If the several hundred thousand people mostly in rural areas who were directly or indirectly affected by the demolition of their local savings unions are made believe that it was not OV’s fault they will go on voting for him.


LwiiH: Let’s not forget that this is a problem that OV inherited and it is a problem created by banks dealing with a population that was not properly protected from irresponsible banking practices nor educated on simple financial facts.

Please VO created this problem back in 1998, by allowing people to borrow in fx (mainly CHF), against low interest rate and making it a political problem, in such a way that MSZP was (cowardly) unable to stop this. Is was considered political suicide.

I was looking for information to back this up, and found this presentation by the MNB with the Polish Financial Supervisory Authority.


It goes back till 1998, but at that time the impact was negative as the exchange rate were in people’s favour.


“As we know, the Hungarian State not only bought a 49% stake in Széchenyi Bank but also purchased outright the Bavarian-owned Budapest Bank, which right after the purchase turned out to be in financial trouble.”

The name of the purchased “Bavarian Bank” is MKB Bank. Budapest Bank is owned by General Electric.


Budapest Bank was indeed owned by General Electric Capital, but was purchased by the state some two months ago.


@someone. Not sure there is much you can do about this one but… On an iPad, it is very difficult to scroll around in the editing window as the entire screen wants to scroll. Scrolling in the editing window when the keyboard is displayed is impossible. You have to hide the keyboard to have any hope of scrolling the small editing window.
That said well done on getting this up and running. WordPresss config is very brittle.


It’s the same on Android devices. I think it’s a basic WordPress s/w problem though, I doubt if even Some1 can do much about it.

Although I would love it if she could stop the blog going back to the top of the page after you submit a comment – VERY annoying!


@Paul Sorry, I am just testing a new function to replace nesting.


OT. “He (Kósa) admitted his mistake and acknowledged he will have to pay the HUF 100,000 fine that is slapped on Fidesz MPs who vote against party orders.”

Fined for voting the wrong way…. This is an affront to democracy! Unfortunately it’s not only a hungarian problem but a problem in other countries. It is past time to fight against caucases.


Kósa can’t even vote the right way?

Why doesn’t this surprise me…


Very useful article. It is worth to add that Töröcskei and Boros while working together in the central bank in the 1980s had been involved in what Der Spiegel described as the largest economic crime of post-WW II. West Germany.

It is just incredible that the central bank had injected public funds to Töröcskei’s Széchenyi Bank as late as last year. But this is how apparently a post-communist banana republic operates.



Töröcskei only did again at Széchenyi what he does best. Made some billions disappear via shady banking deals. Töröcskei, Imre Boross (Töröcskei’s co-perpetrator in that infamous case) and others at the National Bank of Hungary in the 1980’s dealing with foreign currency were all secret service people who have been enjoying a protected status.

Hungary Today

Some spin by the Hungarian government. HVG (without naming the “journalist” who wrote the piece) is apparently a willing media outlet to give place (now regularly) to the government spin. After all, HVG is now owned by Hungarians who need government advertising to survive, else they have to sell the loss-making HVG to Orban’s friends.

According to the Hungarian government the Americans are for real, they will be involved in Paks 2 and the relationship is good, it is changing, some fussy Democrats still have issues with constitutional matters but not with corruption (that’s soooo 2014).

And the EU Commission “let it be known to Hungary” that it will eventually “approve Paks 2”, so no worries. In fact it was the EU which “lobbied for the inclusion” of other participants besides the Russians.

So it will be smooth sailing.

Apparently, the foreign relations spin and manipulation are a top priority for the government.



Well, there’s no medicine for stupidity.

It turns out Buda-Cash managed the investments of a mutual health care fund (a kind of investment cooperative) called Honvéd (Defense employee) Egészségpénztár.

Given the nature of such a health care fund administration it had to have a centrally collected data base of its members, according to index.hu among others data on 1200 secret service employees, 500 of whom are apparently counter intelligence employees (with all social security, personal data).

I wonder how difficult it was (it is still) for Russians to hack a data base of that fund administration to extract the personal info if it was so smart that it (i) invested at Buda-Cash which really had a terrible reputation on the market and (ii) let such central data base to exist at all at a health care fund (which due to its membership naturally had close ties to secret services, but still it’s an independent financial service provider with independent administration).



Topsy-Turvy in Turul-La-La-Land

Hungarian government defends the “unorthodox” performance of its Canadian Embassy Head of Mission at Professor Scheppele’s Roundtable at Concordia University in Montreal.

What an irony that the prince of diplomats, America’s André Goodfriend, who did nothing but good, with exemplary diplomatic eloquence and skill, is recalled, while the the embarrassing, incompetent and indefensible performance of Hungary’s football troll, Lajos Olah, is officially defended by the Fidesz FUD Factory.

Everything really is topsy-turvy in Turul-La-La-Land. The entire world is waking up to it, which Orban’s captive populace remains in its dull and shameful trance.


Very much what the Hungarian government says that Olah spoke up since the opinions were one sided, and bias. How did he know that the opinions will be one seeded and bias (if that how he felt)? He was certainly well prepared with pages and pages of communication at hand. Even if the conversation was bias, why on earth would you send a “diplomat” of such low speaking skills to such event or anywhere in fact? Why would the diplomat lie? For example that the event did invite any Hungarian officials, was a complete lie, and was refuted right on the spot. Hungarian diplomats were regularly invited to such events, but they were not allowed to attend!!!! Why would he say right after that “Why should they attend?” SO which one it is? Do you want to be there or not? There is nothing new about this silly answer from the government. they put really bozos into jobs that are important. Look at Pal Schmidt, Ildiko Vida, etc…. The only qualification these officials need is to be able to follow orders from Orban.


Videos of Concordia University’s Roundtable on the EU, Democracy and Hungary

I. Democracy 101 (Prof. A Gollner, Concordia University)

II. How Hungary departed from democracy in the EU (Prof A Bozoki, Central European University)

III. How the EU can help restore Democracy in Hungary (Prof KL Scheppele, Princeton University)

     The Hungarian government responds…


I don’t know why everyone is so surprised as Orban heaps bankruptcies, and one ridiculous, country-damaging, policy on another…Didn’t I predict 4 years ago that Orban’s hidden agenda
in Hungary is two-fold: 1) to steal as much as he can; and,2) to bankrupt the country and bring
‘white’ Hungarians to their knees…and finally bring victory to the much maligned gypsies of the country.

Orban aims to be the hero of gypsies not only in Hungary, but the world over; and he’s well on his way to achieving that goal.

(Maybe some intrepid journalist should go ‘undercover’
and enter some gypsy communities and see what they think.)


Kulturkampf, or two narratives of one revolution (1848-1849)

The “white” Kossuth under Horthy and restored under Orban (1927-1950, 2015-??)
Are the revolutionary leaders ashamed of their revolution ?
comment image

Th “red” Kossuth (1952-2013) points defiantly in the direction of the guilty Parliament :
comment image


Kulturkampf #2: The prime ministers

Sculpture of István Tisza (1934-1945, 2014- ??) has replaced that of Mihály Károlyi (1975-2012)

comment image

comment image


I saw that Tisza assemblage from the tram on Margithid early last summer. From that distance it looked like a large white pimple. Closer inspection did not improve matters, and when I read Tisza’s bio, I was even more unhappy.



Minden a Sorsé, szeressétek,
Őt is, a vad, geszti bolondot,
A gyujtogató, csóvás embert,
Úrnak, magyarnak egyként rongyot.
Mert ő is az Idők kiküldöttje
S gyujtogat, hogy hadd hamvadjon össze
Hunnia úri trágyadombja,
Ez a világnak nem közösse.


Ady: Rohanunk a forradalomba

News from January 5, 2015:

Orban government will spend 0.8 billion to renovate the castle of the Tiszas at Geszt.
Eighty per cent of the money will come from the European Union.

The government will move out an elementary school and a library from the area.

Tisza’s greatest achievement was that he prevented the percentage of people eligible to vote from going over 7% (!) of the adult population.