Wealth Management in Hungary 2009

Published by: Datamonitor

Published: Aug. 27, 2009 - 12 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

Conservative attitudes to saving and investing have served Hungarian investors well recently

HNWs are unsophisticated on investment matters and very conservative

Hungary has become much more competitive for wealth managers

Table of Contents

Table of tables

Table of figures

HUNGARY'S WEALTH

Hungary is a nation deep in recession

Prior to the recession, the country was borrowing excessively, exacerbating Hungary's vulnerability

Hungary faces a difficult path back to economic stability

Structural reforms are required to aid recovery

Hungary has experienced mixed economic performance over the past five years

The Budapest stock market has performed relatively poorly over the past five years

Higher interest and money market rates have helped Hungarian investors in the last couple of years

Hungarian investors like to play it safe with their money

Deposits dominate the portfolios of Hungarian investors

Despite the recessionary environment, the value of Hungarian HNWs' assets increased in 2008

There was a small increase in the number of affluents and the value of their assets despite the economic and financial upheaval

HUNGARY'S WEALTH MANAGEMENT MARKET

The Hungarian wealth management market is developing and providers need to focus on improving their offering

The Wealth Management Opportunity Index

Wealth management market features

Range of products and services: 2

Level of consolidation: -2

Ease of market entry: 0

Level of international wealth management activity in the country: -2

Level of use of onshore services: 3

Level of demand for high quality service: -2

Case study: OTP Bank's wealth management offering has grown phenomenally well but faces real difficulties in the current economic environment

OTP wealth management commenced operating in the late 1990s

OTP has greatly increased its client base and assets under management since it restructured in 2002

The bank's wealth management offering is built around two customer segments

OTP wealth management has experienced tremendous product development on an open architecture platform

Offshore services are not currently a feature of OTP's wealth management service offering

A developing market under real economic pressure makes the work of a wealth manager very difficult

OTP is not waiting for recovery before launching a client education program

Appendix

Datamonitor's Wealth Management Opportunity Index

There are five key parameters when assessing a market for its wealth management potential

There are 18 components to the five key parameters of the wealth management opportunity index

Institutional factors

Economic variables

Wealth management market size

Wealth management market features

Wealth management client characteristics

Definitions

The drivers of growth in the wealthy population

Income growth (combined with inflation, changes in GDP by sector, household savings rates and debt levels)

Investment returns (market capitalization, interest rates and bond yields)

The following measures are not, in themselves, drivers of wealthy population growth

Market capitalization

GDP

The following measures are not drivers of wealthy population growth except under very restricted circumstances

Primary residence value growth

Inheritance

Methodology

Global Wealth Model

The UK sub model

Global sub model (for all other countries)

Forecasting methodology

Continuous refinement to the understanding of liquid wealth distribution

Datamonitor's wealth numbers compared with other wealth numbers

Bibliography

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: The rate of unemployment and average nominal wage growth in Hungary and Europe, 2004-2008

Table 2: Inflation has been variable, although generally relatively high, in Hungary between 2004 and 2008

Table 3: Market capitalization of Central and Eastern European stock exchanges

Table 4: Short-term deposit and money market rates, and change in consumer prices in Hungary

Table 5: The portfolio allocation of retail investors in Hungary

Table 6: Number of individuals in Hungary in euro bands (000s)

Table 7: Forecast number of individuals in Hungary in euro bands (000s)

Table 8: Value of onshore liquid assets in Hungary in euro bands (€bn)

Table 9: Forecast value of onshore liquid assets in Hungary in euro bands (€bn)

Table 10: Wealth Management Opportunity Index - Hungary

Table 11: Wealth Management Opportunity Index with values - Hungary

List of Figures

Figure 1: The unemployment rate in Hungary now eclipses that of Europe as a whole

Figure 2: The Budapest Stock Exchange has had a battering over the past five years

Figure 3: Deposit and money market rates have been high in Hungary, above the European average

Figure 4: Deposits dominate retail investors' portfolios in Hungary

Figure 5: The number of wealthy individuals in Hungary is set to continue to increase after 2009

Abstract

• Sizes, segments and forecasts the number of affluent individuals across 10 liquid asset bands from EUR50k.
• Primary research among domestic wealth managers provides insight into HNWs and the private banking market.
• Utilizes Datamonitor's proprietary Wealth Management Opportunity Index to score the attractiveness of the market.

• Understand the opportunities for foreign wealth managers in this market through business success insights from the major players.
• Assess market attractiveness by reviewing size and growth forecasts for the potential wealthy client base five years ahead.
• See how the Hungarian wealth management market scores against Datamonitor's Opportunity Index.

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