Magazin: Changes in the financial sector

Data from Céginfo.hu (www.ceginfo.hu) reveals that Hungarian companies opened almost 660,000 bank accounts in the last five years. More than 93 percent of these are with the twelve biggest banks and savings cooperatives. The same data also sheds light on the fact that there have been great changes in the market. Zoltán Takács, the head of corporate sales at Budapest Bank told our magazine that the bank’s corporate lending division has always been characterised by cautiousness. Because of this they didn’t have to make drastic changes in their lending policy.

The bank didn’t finance municipalities and projects either, therefore it was able to operate profitably during the years of recession, too. Mr Takács’s experience is that demand is biggest for short-term loans and the market of corporate lending is shrinking – still Budapest Bank was able to place 8 percent more corporate loans in the first half of 2013. MNB’s ‘Funding for Growth’ scheme has given an impetus to investments. When the programme continues more enterprises will get the chance to invest in development. Budapest Bank’s expert reckons that the competitiveness of food firms is negatively influenced by the high level of VAT on food products, which led to the prevalence of the black market. László Kálmán, the director of Erste Bank’s SME division opines that after the no-investment strategy of businesses in recent years the summer of 2013 brought a bit of activity in the SME lending market. Erste Bank has developed products especially for food firms and for investing they recommend MNB’s Funding for Growth programme, MFB’s Enterprise Financing Programme, while for exporting they recommend Eximbank’s export pre-financing loan. Since July Hungary’s Civil Code stipulates stricter payment deadline conditions than before, for instance the deadline for paying invoices mustn’t be longer than 30-60 days. Late payers can be obliged to pay a minimum of EUR 40 remuneration and the default interest on late payments rose from plus 7 to plus 8 percentage points of the central bank’s base interest rate. GF Faktor CEO Zsombor Baltay informed Trade magazin that this year average payment deadlines decreased to 27 days from last year’s 29-30 days, while average late payments increased to 23 days from 20 days, which on average means 50-day actual payment. The value of late payments and non-payments could be as big as several thousand billion forints. In the FMCG sector it is mainly the suppliers of major firms that ask for financing and factoring products suit their needs really well. Géza Deme, deputy CEO responsible for sales at CIB Faktoring told us that there has been no major improvement in companies’ willingness to pay. CIB Faktor makes CIB bank’s knowledge and information available to their customers. At CIB the prices of loans and factoring are getting closer to each other, for instance there are cases when factoring is available with better conditions than loans. With the help of factoring FMCG companies’ cash flow accelerates. CIB Faktor developed products tailored to the needs of FMCG firms: Hiperfaktoring is of great help to the suppliers of retail chains. Last year CIB Faktor Zrt. achieved growth way above the 29-percent market average. Zsolt Major-Maróthy, the CEO of CE Faktor Zrt. revealed that last year the claims financed by Hungarian Factoring Association members amounted to HUF 862 billion – this means that factoring firms gave about HUF 110 billion of current asset financing to enterprises. The share of factoring finance keeps growing from year to year and is now at 13-15 percent a year. Last year CE Faktor Zrt. generated HUF 26.4 billion factoring turnover in the market. According to factoring companies, the average payment period after an invoice has been issued is 58 days. Mr Major-Maróthy’s view is that the 30-day invoice receiving deadline stipulated by the new law can be of great help for businesses in the food industry, but in many cases this would still cause liquidity problems to suppliers. He told that one of the factoring trade’s objectives is to create an interest rate-subsidised factoring programme with the participation of the state, which would contribute to increasing the GDP, preserving jobs, whitening the grey economy and boosting Hungarian enterprises.