Overview 1
Catalyst 1
Summary 1
Methodology 2
Executive Summary 3
Conservative attitudes to saving and investing have served Hungarian investors well recently 3
HNWs are unsophisticated on investment matters and very conservative 3
Hungary has become much more competitive for wealth managers 3
Table of Contents 4
Table of tables 6
Table of figures 7
HUNGARY'S WEALTH 8
Hungary is a nation deep in recession 8
Prior to the recession, the country was borrowing excessively, exacerbating Hungary's vulnerability 8
Hungary faces a difficult path back to economic stability 8
Structural reforms are required to aid recovery 9
Hungary has experienced mixed economic performance over the past five years 9
The Budapest stock market has performed relatively poorly over the past five years 11
Higher interest and money market rates have helped Hungarian investors in the last couple of years 13
Hungarian investors like to play it safe with their money 14
Deposits dominate the portfolios of Hungarian investors 14
Despite the recessionary environment, the value of Hungarian HNWs' assets increased in 2008 16
There was a small increase in the number of affluents and the value of their assets despite the economic and financial upheaval 16
HUNGARY'S WEALTH MANAGEMENT MARKET 20
The Hungarian wealth management market is developing and providers need to focus on improving their offering 20
The Wealth Management Opportunity Index 20
Wealth management market features 23
Range of products and services: 2 23
Level of consolidation: -2 23
Ease of market entry: 0 24
Level of international wealth management activity in the country: -2 25
Level of use of onshore services: 3 26
Level of demand for high quality service: -2 26
Case study: OTP Bank's wealth management offering has grown phenomenally well but faces real difficulties in the current economic environment 27
OTP wealth management commenced operating in the late 1990s 27
OTP has greatly increased its client base and assets under management since it restructured in 2002 27
The bank's wealth management offering is built around two customer segments 28
OTP wealth management has experienced tremendous product development on an open architecture platform 28
Offshore services are not currently a feature of OTP's wealth management service offering 29
A developing market under real economic pressure makes the work of a wealth manager very difficult 29
OTP is not waiting for recovery before launching a client education program 29
Appendix 30
Datamonitor's Wealth Management Opportunity Index 30
There are five key parameters when assessing a market for its wealth management potential 30
There are 18 components to the five key parameters of the wealth management opportunity index 31
Institutional factors 31
Economic variables 31
Wealth management market size 31
Wealth management market features 32
Wealth management client characteristics 33
Definitions 34
The drivers of growth in the wealthy population 34
Income growth (combined with inflation, changes in GDP by sector, household savings rates and debt levels) 34
Investment returns (market capitalization, interest rates and bond yields) 34
The following measures are not, in themselves, drivers of wealthy population growth 34
Market capitalization 34
GDP 34
The following measures are not drivers of wealthy population growth except under very restricted circumstances 35
Primary residence value growth 35
Inheritance 35
Methodology 35
Global Wealth Model 35
The UK sub model 35
Global sub model (for all other countries) 35
Forecasting methodology 36
Continuous refinement to the understanding of liquid wealth distribution 36
Datamonitor's wealth numbers compared with other wealth numbers 36
Bibliography 37
Further reading 37
Ask the analyst 37
Datamonitor consulting 37
Disclaimer 38
List of Tables
Table 1: The rate of unemployment and average nominal wage growth in Hungary and Europe, 2004-2008 10
Table 2: Inflation has been variable, although generally relatively high, in Hungary between 2004 and 2008 11
Table 3: Market capitalization of Central and Eastern European stock exchanges 12
Table 4: Short-term deposit and money market rates, and change in consumer prices in Hungary 14
Table 5: The portfolio allocation of retail investors in Hungary 16
Table 6: Number of individuals in Hungary in euro bands (000s) 17
Table 7: Forecast number of individuals in Hungary in euro bands (000s) 18
Table 8: Value of onshore liquid assets in Hungary in euro bands (€bn) 18
Table 9: Forecast value of onshore liquid assets in Hungary in euro bands (€bn) 19
Table 10: Wealth Management Opportunity Index - Hungary 21
Table 11: Wealth Management Opportunity Index with values - Hungary 22
List of Figures
Figure 1: The unemployment rate in Hungary now eclipses that of Europe as a whole 10
Figure 2: The Budapest Stock Exchange has had a battering over the past five years 12
Figure 3: Deposit and money market rates have been high in Hungary, above the European average 13
Figure 4: Deposits dominate retail investors' portfolios in Hungary 15
Figure 5: The number of wealthy individuals in Hungary is set to continue to increase after 2009 17