World Economy

EBRD Decries Targeting Ownership of Foreign Banks

EBRD Decries Targeting Ownership of Foreign BanksEBRD Decries Targeting Ownership of Foreign Banks

The head of the European Bank for Reconstruction and Development (EBRD) attacked the idea of national targets for ownership of banks on Monday after Hungary signaled that it may take a more protectionist stance against foreign lenders.

Hungarian Prime Minister Viktor Orban said this month that he expected 60 percent or more of the country’s banking sector to end up under domestic ownership, a target that means more foreign-owned banks would have to sell up, possibly at reduced prices, Reuters reported.

Though Hungarian officials have said in the past that they expect several foreign banks to leave, Orban suggested a figure of 60 percent domestic ownership. At present about half of the country’s banks are in Hungarian hands.

Addressing an economic conference on Monday, EBRD President Suma Chakrabarti said it would be healthy and welcome for some rebalancing of bank ownership among international and local investors in central and eastern Europe, provided that it follows a market-based process of some investors deciding to exit and local entrepreneurs stepping up to fill the gap.

“However, and I want to emphasize this: we at the EBRD don’t believe in targets for national ownership in any sector,” he said without specifically mentioning Hungary.

Chakrabarti said he thought that capital should continue to flow from advanced to emerging economies in Europe, which he described as good business for both sides.

“Well structured and managed use of foreign capital should not be abandoned. We should not throw out the baby with the bath water, as we in Britain say.”