September 19, 2013 / 11:59 AM / in 4 years

UniCredit to cut costs in Hungary

BUDAPEST, Sept 19 (Reuters) - The Hungarian unit of Italy’s UniCredit will close some branches to reduce costs after the government imposed a tax on financial transactions earlier this year, the bank said on Thursday.

The bank will need to pay 6.8 billion Hungarian forints ($30.49 million) in additional tax imposed on transactions, which it cannot pass onto customers, business website hvg.hu reported the head of UniCredit in Hungary, Mihaly Patai, as saying.

Hungary’s banks, most of which are foreign-owned, have suffered losses in the past two years after the government imposed a big windfall tax on the sector in 2010 and a new tax on financial transactions this year.

An earlier government-imposed repayment scheme on foreign currency mortgages also inflicted losses on banks.

UniCredit was one of the few banks that posted an after-tax profit last year, amounting to 24.3 billion forints.

Intesa unit CIB, Austria’s Erste and Raiffeisen and others all made losses last year, data from the financial supervisory PSZAF showed.

“This situation can be resolved only in one way: if we start large-scale cost-cutting,” Patai was cited by hvg.hu as saying at a news conference.

It said the bank would merge some Budapest branches to reduce, eliminating 15 to leave 105 branches nationwide. Patai said that dozens of employees would be laid off.

He said the resulting cost savings would help cover 40 percent of the 6.8 billion forints tax payment, while 30 percent would be saved in marketing and a further 30 percent would come from additional growth.

$1 = 223.0447 Hungarian forints Reporting by Krisztina Than; editing by Jason Neely

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