Magazine: The crisis did not bring the expected purification

In the first nine months of 2010 the insolvency index of companies was up 18 percent from the same period last year. Coface Hungary forecasts an insolvency ratio above 6 percent for the end of the year – this proportion is 10 percent higher than a year earlier. Gábor Kárpáti, Coface Hungary’s managing director is surprised at the fact that the crisis did not entail a purification of the market: the number of liquidation procedures did not rise drastically; what is more, growth is already slowing down. Building/construction and retail/wholesale are still the riskiest sectors, with the highest number of procedures. Examining the change in the proportion of procedures, we can see the index worsened the most in the machine industry (+43.61 percent) and in real estate management (+37.11 percent) in the last twelve months.

According to Coface Hungary’s experts, the low level of lending is still a problem. Bank financing is expensive and difficult to obtain, so more and more companies are lending to each other. As long as banks are making huge profits with the present level of risk taking, they will not invest more into the economy.