Generally on Postabank

0
322

Introductory

The more than eleven year history of the Postabank and Savings Bank Co. is much rather a political than an economical matter in today’s Hungary. There has not been a day for nearly two years already when one of the economical news would not cover the happenings about Postabank.

It is indispensable to shortly revive the history of the bank to understand the daily analyzing. It is particularly true in the case of the Postabank that my opinion is subjective because the chairman-director general founding the bank has belonged to among my friends for years. At the same time nor it might be secondary that I am one of those few people who were there at the organizing of the bank, who formed opinion and helped its establishment.

The circumstances of the starting of the bank instituted at the very end of the eighties is still obscure but in my opinion the idea of Postabank comes from a young bank-expert working in the National Bank that time, Gábor Princz. True that he himself has never asserted it. I think he did it because he „intrigued” with excellent sense even at the foundation. They would have probably never permitted the establishment of the bank without it. Or, according to the customs of that age, they would have „stolen” it, i.e. it would have come into being not with the inventor’s direction. It seemed to me even then that the bank-leader disclosed just as much to anybody – including his closest colleagues – as they needed to fulfil their daily tasks successfully. He disclosed as much to me as the that-time cochairman of the Entrepreneurs National Alliance (VOSZ) at a lunch of acquaintance that the a commerce bank should be founded. The first one which comes into existence not by the earlier demerger of the National Bank of Hungary, not by the artificial distribution of the firms, but the condition system and needed resources of which is created by the economy itself. This way the bank can have a clean start, it can settle its direction itself, in which the Hungarian private ventures take the most prominent part. Therefore it is definitely important for the VOSZ to be among the charter members – be its share ever so little. What he said was true and not true. I myself, who organized and founded the biggest Hungarian alliance of the private entrepreneurs, would have liked not many things more than a significant bank for the home entrepreneurs that time. But at the same time as an economist dealing with the processes of macroeconomics I knew it exactly that such a bank would be not operational. That time such a big disproportion marked the composition of resources of the private entrepreneurs in which the need of resources outdid the periodical savings of resources of these ventures. Over and above that the private sector represented only a few percent importance in the economy. So nor its bank could have been a significant and influential bank.

But the idea was good to open numerous doors, to make the idea of the new bank acceptable for the most of the political world. Others were possible to be made side with the bank by saying that the development of the competition among the banks should be continued. And the monopoly of the OTP can be broken by only such a bank which is present in all the communities. It was expectable for none of the commerce banks to establish such a network fast within reasonable time. But the bank co-operating with the post could start with the slogan „we are present on the three-thousand two-hundred points of the country” right away. And disliking the OTP that time was a chic even politically. Gábor Princz and his team had overcome all the difficulties extremely deftly. If somebody opposed then instead of the opposition they tried to find what it would be that could make the person in point side with the idea of the bank. If it was possible then it was actually built into the conception of the bank but the importance of it was known and fixed only by Gábor Princz. For example the financing of the private ventures had been built into the aspect of the bank more than anything. The bank constituted an independent Private Enterprise Board, and the VOSZ national headquarters was to be found in its building. The Postabank was the greatest supporter of the financial stability of the VOSZ for ten years. The importance of the private sector inside the economy of the bank followed the current real processes of the economy. This way the real stability of the bank was given by those high cash flow firms the management of which Gábor Princz, before the foundation of the bank, could convince of maintaining their accounts with the new bank. These companies could have provided for an „own bank” on the basis of their financial processes. In many countries their finances are really transacted by their own banks. But in this country they belonged to the „one of the clients” category at our onetime financial institutions, keeping the comfort of the client-situation of the recent past – one bank, so this is all. Gábor Princz offered and gave special customer service, lower bank charges issuing from the mass-commerce, and mainly higher recompense for their account money. The OTP really got its most significant rival (till now) which, I am convinced, had a major part in that the developments at the OTP accelerated, the bank significantly changed its business policy, consumer service, and mainly in decreasing the duration of the administration and the transactions to a fractional part as compared to the earlier one.

But the most important part of the idea was – never outspokenly – winning the post. Everybody could see that the three-thousand two-hundred post offices potentially meant a really big chance. But it depends very much on what a degree the post „lets the bank in” its branch network. But only a few saw the following. While the inflation significantly accelerated, therefore the money cost more and more, meanwhile the post – though with some injury of the consumers – kept the billions of the mail transfers of the people and the legal entities on its account for more than a week even on an average. It did it with reference to its obsolete machines and infrastructure. There was not a moment when the sum of our money „resting” at the post was under the scale of billions. But nobody had to pay for this account money, i.e. it was free of interest also in those periods when the credit interests outdid the thirty percents. It meant such a unique financial background for both the post and the bank of the account which let them make a credit- and deposit-policy significantly different from the others’. The bank assured it by such a background that it gave its new clients more for their deposits, account moneys more than any other banks. And at the same time it assured a more modern and higher level service for them. Accordingly, on the other hand it also assured the needed resources a little more expensively. True that the bank always had money, even in those periods when other banks obtained – if they could – pretty expensive resources from the market.

The bank had developed into one of the best-known banks within a few years. The plans of the Postabank began to fly and it pleased many people but meant an undesirable circumstance to many others. Who liked it those were glad of the successes of the bank but deemed it too obvious which had nothing to do with. This way for example the owners consented to the developments, the strategy that this single chance could not be missed by the bank. But they decided in favor of taking most of the dividend connected to the profit out instead of the further investments (capital increase) attached to the decisions of development. The „special resources” had significantly receded because of the decrease of the inflation, the significant reduction of the duration of the mail transfers, the other founders’ big business privatization and becoming of more participants. And the new money taking their place appeared neither as capital increasing nor by leaving the own accumulated resources in the bank. But the adversaries became more and more active. The general economic processes, in which for example nearly the third of the economic participants became insolvent – including the proportion of repaying the bank loans -, made the state consolidation indispensable for all the banks. Even a law was legislated for this. The ones disapproving of the bank-leader’s person and undesirable independence, including many of the leaders of the rivaling banks and several leaders of the National Bank of Hungary, thought that the time was ripe for the intervention that time. The Postabank could have got the possibility of participating in the consolidation only if it had opened positions for intervening in the life and strategy of the bank. The management of the Postabank and Gábor Princz were not inclined to do it and decided (I think, wrongly) not to ask for the consolidation but to solve their difficulties themselves. Urging this capability, at the introduction of the aspect of the bank they would make an advantage out of the difficulties. Who would not accept that the bank, which is able to hold its head above water itself in such an economic environment without help and indeed developed with undiminished energy even without the state resources, can be only the most significant financial institution?

From that time on the life of Postabank became the period of looking for resources and fleeing ahead. It is unknown who organized the bank-panic in 1997. There were a lot of people that time too who professed that „the worse for the Postabank the better”! The state helped the bank directly (e.g. capital increasing) or in hidden ways (e.g. ÁPV Co. portfolio exchange) several times. The press presented it by turns as the foretoken of the probable scrape of the Postabank, sometimes voluntarily and sometimes as a „favor”. However these „aids”, considering both their form and volume, were far from the amounts of consolidation given to the other banks of the bank-sector proportionally to their sizes. The bank-sector which was flaunting with throwing out its chest already then. However the so-called inherited (of political nature from the period before the change of regime) suspicious loans were only a fraction of these.

In the spring of 1998 – already visibly now – the bank worked a new consolidation strategy out. Its realization was rendered more difficult by that – issuing from the peculiarity of the bank-sector – the bank had to execute it with simultaneously and continually excusing itself. It had to excuse against the statements betting the sure failure of the bank, asserting that the economy of the bank did not require any help. It was probably not true, but since the bank was founded on the clients’ confidence, they could hardly acknowledge it frankly. In the spring, also supplying the loss of the year 1997, the state also increased the capital significantly. Probably to reduce the auditors’ doubts and the debates on the appraisal of the chattels of the bank, the bank exchanged the significant part of its shares and premises hard to appraise for the portfolios of the ÁPV Co. Those were listed, therefore acknowledged also by the market. It continued to decrease the obligation of the bank to constitute a so-called expedient reserved fund. On the spring general meeting they also decided to introduce the bank on the Budapest Stock Exchange by the end of the year.

For the reason of making it clear to all it might have to be told that the banks – issuing from their special nature – must survey their assets (their companies, investments, the value of their premises, the probable likelihood of their lent out loans etc.) on a regular basis. They must compare the appraisal of the assets with the value in the books of the bank. It might be less than the so-called book value. In this case, till the selling of the given asset, till the termination of the loan contract etc. they must constitute a so-called „expedient reserved fund” for the hundred percents of the difference from the profit of the bank or its accumulated reserve. Because it is what means total safety for the clients placing their money in the bank. If neither the profit nor the reserve render it possible then the bank can go on operating only if the owners supply it (for example by increasing the capital). It seemed to me that, also to spare the owners’ purse, the leaders of the bank worked an own consolidation strategy out too. The capital-increase by the state provided the bank with enough resources. So the bank tried to find such investment possibilities of great value in the system of its connections. Where the assets valuations preceding the purchase found significantly greater assets value, business value than how much the bank could buy it for issuing from the seller’s emergency or the low negotiability or the rare being of the given investment. At the total appraisal of the investments of the bank – issuing from their contrary trends – these investments mean positive coverage. I.e. they reduce the obligated expedient reserved fund of the bank. It significantly reduced the risk of these investments that – mainly on the property market – a price rise outdoing the inflation many times was probable within a few years. This process can be continued to strengthen by the Hungarian accession to the Union or even by the official announcement of the exact date of the accession. This way the income to be expected at the significantly upgrading selling of the present investments could probably mean a coverage for the final losses occurring at the expiration of the so-called bad credits. It can result in making a significant part of the expedient reserved fund usable.

But the realization of the consolidation plan begun by Gábor Princz and his colleagues was broken off at the end of July, 1998. The MSZP lost its chance to form a government at the elections – contrary to the preliminary expectation. A new government led by the FIDESZ MPP was formed. The management of the Postabank had valuable political connections also in the circles of the FIDESZ. Also the Prime Minister, Viktor Orbán himself maintained good personal relations with Gábor Princz in the years preceding the elections. But inside all the bank-sector several of those people surrounded the decision-makers of the FIDESZ who „were not interested” in strengthening the Postabank and Gábor Princz. But they deemed to discover much more palpable interests in it that a Postabank made lose its value could open up innumerable new vistas for them. Therefore they had achieved the politics to suddenly remove the entire management of the Postabank and to appoint their own – and mainly loyal even without questions – people to the head of the bank.

It can be only guessed that who and by what reasons were led that time. But I render it possible again that, as at the institution of the bank, also now a lot of people, for various reasons, became interested in „bankrupting” the bank. I can certainly assert it that many former and still functioning bank-leaders, including many of the management of the National Bank of Hungary, cheered for Gábor Princz’s failure with pretty big activity. And definitely because of personal antipathy. Also the opinion of those is probably true, who assert that many people saw definitely a favorable financial possibility in the following. The multitude of the real shortage could be placed to the account of the previous management at the „reorganization of finances” of the bank. Then supplying it from state resources, later they could turn the excess to their own advantage. We can see its empirical realization day by day. Mainly the „robbing” of the assets of the bank for no consideration (e.g. the press holding of the bank) or for the fraction of the value (e.g. the receivables and the premises of the bank). The circle of those is pretty wide who saw a position assuring a significant income in the Postabank for themselves after taking the direction of the bank in hand. Or orders meaning billions even in course of the operation of the bank or a future sponsor possessing significant resources. We can see it from the daily published news that these expectations were well-founded.

But for this the bank needed a new consolidation strategy. The state pledged itself in advance to supply the total shortage of the bank after its „real” volume becoming known. The sum – we remember, do not we? – changed daily. First the statements were about thirty billions, then the amount jumped rapidly to fifty billions. And later it became seventy, ninety and finally one-hundred and fifty billions. But this amount raised it in many ones that something was wrong here. It was hard to uphold professionally that the auditors having international prestige failed to notice one-hundred and fifty billions during their previous works. With an actual loss of one-hundred and fifty billions the bank would have become insolvent long since. The leader of the State Money and Capital Market Supervision Authority (ÁPTF) wrote a letter to the Ministry of Finances that they were „over-planning” the Postabank with at least fifty billions. Of course Imre Tarafás had to leave his post following this. In December of 1998, leaving the above-referred viewpoint of the director of the supervisory body of the bank out of consideration, the new general staff of the bank had the amount of the original conception passed by the general meeting of the bank. But „managing” the property of the overcapitalized bank with two-thousand so-called small investors is difficult and perhaps also dangerous. Therefore the consolidation solution of the bank had to be completed with such an element where the two-thousand fellow-investors lost their investments. Then the state practically becomes exclusive owner and under the protection of the bank secret it gets full freedom in the so desired trusteeship.

The state could have played this ousting game also „lawfully” – with its three-quarter majority holding -, but it would have cost it another fourteen billions. But they did not wish to spend money on it. So nothing was left to them but the trial of „hoodwinking” the two-thousand small investors, where they tried to make the principle of the investors’ loss accepted by the mass of statements for the reason of the losses of the bank. The ones who prepared the strategy took offence at it pretty much that their idea remained unsuccessful in spite of that the editors of the economic papers, news programs certainly „lapped up” the official statements for months. They forwarded those to the public and this way to the involved ones without any professional control. Then it came to light that several investors – perhaps unusually – were from the trade and moreover only a part of them was under state influence. This way they had to experience it unwillingly that it would not be so simple as they thought. For me even that was exasperating that the sate tried to let its nearly two-thousand citizens down by referring to economy. But I think it frightful that the state does not think the lawful behavior obligatory for itself (too!) even after its trial had not met with success. Because now they can not refer to it any longer that they failed to notice their legal obligations. And that is simply improbable for their experts not to know that what they are doing is all unlawful and morally unacceptable at the same time. Now many legal proceedings have been taken against the Postabank and the state of Hungary, the outcome of which can be and must be seen in advance. It will be surely a disbursement of several billions again. The law charges, the increase in expenses can be hardly called a good economical decision. True it will be reduced by that many aggrieved small investors will be definitively losers of the bank because of the lack of proper legal background or the expenses of litigation. But taking it morally by the present decision-makers of the bank is fully incomprehensible and mainly unacceptable for me.

For that one who participated in the establishment of a new bank, the Postabank and cheered for its development, prestige and successes it was very hard to see, hear and experience it now day by day how the ones producing so little in creating so far ruined all we had without any signs of inhibition. The previous year of the bank will remain the „shame” of the life of the bank forever. The real problem is not that a new political trend saw a chance for itself in something that was definitively in their possession. The previous governments „favored” themselves and their favorites in a scale of ten- and hundred-billions just as well. Though it can be never accepted, but also changing it will be very hard anytime. Of course it would be good if the wish for grasping became perceptible together with more self-restraint. If beside the value-making the keeping the own interest in prominence became implied only in a fraction of the cases. The really big problem is the way they executed the expropriation, privatization of the Postabank. Also I myself saw it in the summer of 1998 in the news of the televisions when Gábor Princz announced the following. That the state should not organize an „attack of buying up” more than seventy-five percents of the shares of the bank for the sake of removing him from his function. A bank cannot be led „against” the majority owner if it does not trust his person. Therefore if they request it then he will resign his post.

So it was unnecessary for them to take the bank over from its previous leaders by force, with a spectacular but senseless purge a few days before the general meeting. Which purge was very harmful for the confidence toward the bank and the atmosphere surrounding the bank. The Postabank, let it be directed by anybody in the future, had got so many snubs from its new managers that it would be quite a wonder if it could stay up permanently after all these. It would be possible neither humanly nor legally but even by the interests of the bank to explain that discrediting campaign. That mass of statements by which the new owners, leaders of the bank disparaged the past of their own possession and tried to discredit the people connected to that by any kind of relation. This method caused damages of surely ten-billions to the future of the Postabank for nothing, so senselessly. Perhaps it is the most sorrowful! The senseless lashing, the aimless damaging which have been even combined with the conscious violation of the laws in numerous times. The concept of bank secret worked in the case of the Postabank in the last year only where and when it was needed because of the inexplicable being of its decisions. If they could place the past in a worse light by leaving this out of consideration then a little bit violating the law did not mean retention. The certain statements are often almost painful for economic and legal experts. I do not mean the accidental sentences but the skill of the intended statements. I have heard the following at least ten times as answer for an admonition for an obligation. The competent leader of the bank said such an explanation that the present leaders of the bank did not take responsibility for the liabilities incurred by the previous management. Nor for the fulfillment issuing from decisions, contracts made by the previous management. I am convinced that once that commission and the company audit happening as its result, which later became the basis of the decrease of capital of the bank and the following increase of capital, will be the blot of the trade. The general meeting of the bank in the December of 1998 was the general meeting of the mockery of the statutory regulations concerning the business organizations, banks and financial institutions.

In my opinion outlining these introductory thoughts was indispensable to understand the daily subjects connected to the Postabank and to be able to incorporate them in one system. I trust in that reading this writing you will be able to read between the lines (sentences) and take notice of the speaker’s (the one who talks beside the point) real intention better.


János Palotás 10.09.1999