French insurer Axa announced on February 3 it has entered into an agreement with Hungary’s OTP Bank to sell its Hungarian banking operations.

The sale is the latest of a string of deals that has seen several foreign lenders quit Hungary over the past 18 months. High taxes and forced conversion of forex loans have pushed lenders in into huge losses in recent years, while stuggles in other markets have also put on the pressure to draw back.

Hungarian Prime Minister Viktor Orban achieved his goal to have 50% or more of the banking sector in local hands when the state bought two major players. However, OTP - the country's largest lender - has remained tentative regarding acquisitions in its home market, despite a peace deal struck by Budapest a year ago.

Foreign investors are clearly still struggling to reap the benefits. Axa said in a statement that the sale of its Hungarian unit will result into a one-time loss of around €80mn. A provision was booked in the group's 2015 consolidated financial statements.

“This transaction is the final step in the repositioning of Axa Bank Europe as a fully focused Belgian retail bank, serving almost one million clients and operating jointly with Axa Insurance in Belgium”, Axa Bank Europe CEO Jef Van In said.

The transaction is subject to customary conditions, including obtaining required regulatory approvals. The deal is expected to be completed during the second semester of the year.

OTP Bank’s move is its first in Hungary for some time. The government's tough policymaking has seen OTP searching abroad for opportunities in recent years. However, the Hungarian bank’s acquisition strategy appears to be responding - to some extent at least - to Budapest's efforts to soothe the tension. 

OTP now says it expects increased profitability due to an improving domestic market environment. However, it told bne IntelliNews last month that it has no interest in the planned sales by the government of MKB or Budapest Bank, which are amongst the country's top ten largest lenders.

Budapest has pledged to relieve pressure on the sector after years of punitive policies, as it is trying to persuade banks to boost credit to support an economy that is set for a slowdown. Yet, having survived the poisonous climate that has persisted for so much of the past five years, foreign banks continue to run out of patience or stamina.

Austria's Erste signed a deal to buy Citigroup's Hungarian retail banking business in December. Russia’s Sberbank announced the same month plans to close 13 of its branches in Hungary. No little speculation persists that the state-controlled giant is looking to offload the unit entirely.