Bill seeking to limit transparency at Hungarian central bank revived

By bne IntelliNews April 21, 2016

A bill amendment seeking to allow companies launched by the Magyar Nemzeti Bank's six foundations to have the right to close their books to public scrutiny was accepted by Hungary's Parliamentary Committee of Legislation on April 21.

The proposal comes in spite of the Constitutional Court recent ruling stating that the MNB must allow public scrutiny of all cash under its stewardship. The verdict struck down the original bill seeking to allow the central bank to withhold information on the foundations themselves. The latest move will only deepen speculation that companies run by the foundations are actually behind the mysterious consortium that agreed to buy MKB bank from the state in late March.

The MNB, which has overseen MKB - formerly the fourth-largest bank in Hungary - since it was bought by the state in 2014, has repeatedly rejected claims that the bank was bought by the central bank itself, using private equity funds as a cover. However, with the names of the investors behind the funds remaining unknown, and a bevvy of other circumstanstial evidence popping up, speculation about the central bank's involvement has been rife.

MNB’s six educational foundations, which were handed HUF245bn (€790mn) in 2014, have launched five companies. The proposed modification would give the MNB the power to withhold information on these companies, if it judges that "dissemination would harm the companies’ competitiveness".

Among the five, Ferida has attracted the most attention from the Hungarian press. It was launched in October 2015 by the Pallas Athene Domus Scientiae foundation, which has Adam Balog, present CEO of MKB, as president of the board.

Ferida was launched with a capital of HUF2bn, however, this was topped up by a further HUF20bn in late February. The official reason for the capital increase was that the board has been instructed to "conduct a legal and numerical examination in connection with foreign investment opportunities,” reported weekly Magyar Narancs.

There the trail ends. Many Hungarian media and analysts conclude that Ferida is in fact behind Blue Robin Investments or Metis, the two equity funds that each agreed to buy a 45% stake in MKB. The pair were both launched just a matter of weeks before the deal was announced.

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