The owners of eleven savings cooperatives as well as of Takarek Commercial Bank, formerly FHB Bank, have approved their merger with Takarekbank, the new universal commercial bank of Hungary's integrated savings cooperatives, Takarek Group said on September 3.

The merger will be completed before November after which time Takarekbank will become the fifth-biggest financial institution in Hungary, with total assets of more than HUF2.3 trillion (€7bn).

Takarekbank will have 1.1mn clients and a network of branches that extends across the country. There will be at least one branch within a 15km radius, and in rural areas, it will serve clients with buses, according to an earlier announcement.

The merger will strengthen the integration of Hungary's savings cooperatives launched under a government initiative in 2013 to create synergy and help the coops meet stricter European Union capital adequacy requirements, shareholders were told.

The loosely organised community of savings cooperatives have been losing out against well capitalised commercial banks, management said. The biggest challenges of the integration process involve the upgrade and integration of IT system and the streamlining and uniformisation of product lines.

The integration of Hungary's fragmented savings cooperative sector enjoys the support of the government, which wants to see a 50% domestic ownership in the sector. This has already materialised as the state has acquired Budapest Bank and businessmen close to PM Viktor Orban bought MKB Bank. 

The long-term plans involve creating a huge commercial bank that could be a challenger to OTP Bank, one of the largest lenders in the region.

Takarekbank is tipped to buy Budapest Bank, which will be privatised soon. The possible merger of MKB, Budapest Bank and Takerekbank would create Hungary’s second-largest financial institution.