BUDAPEST--Raiffeisen Bank International AG (RBI.VI) of Austria
said on Wednesday it will pare down its retail banking business in
Hungary and focus on well-heeled customers after recording its
highest ever loss in the country last year.
Raiffeisen will close 45 out of its 112 branches this year and
lay off 15% of its roughly 2,500 workforce by the end of the next
year, the Hungarian operations said in a statement.
The Hungarian unit Raiffeisen Bank Zrt. will "rescale" its
business model to focus on "affluent and premium customers, the
corporate and private banking markets in the future," it said.
The bank stressed it will remain active in the retail
segment--banking services offered to individuals, with
strengthening its digital banking services.
The Hungarian subsidiary booked a net loss of 114.7 billion
forints ($416.1 million or EUR381.1 million) last year, the highest
ever yearly loss it booked in the country, on top of a HUF31.2
billion loss in 2013. That accounted for the lion's share of the
Austrian parent company's consolidated net loss of EUR493 million
last year, its first loss since it was listed in 2010.
Hungarian banks, including Raiffeisen, have endured major losses
over the past several years because of the global financial crisis,
but also due a large extent to Hungary's special, bank-sector tax,
the highest in the European Union.
It also booked losses on a government-mandated conversion of
foreign-currency mortgages into the local currency. Raiffeisen put
EUR251 million into provisions last year due to the mortgage
conversion.
Despite its Hungarian losses, Raiffeisen remains committed to
the country and targets a return to profitability next year, it
said.
"In order to achieve this target, the bank should fit its
business strategy for the new expectations and make its operations
even more efficient," Chief Executive Heinz Wiedner of the
Hungarian unit said in the release.
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