Hungary confirms sale of MKB Bank for HUF37bn

Hungary confirms sale of MKB Bank for HUF37bn
MKB appears to have been cleaned up and sold at a vastly reduced price
By bne IntelliNews March 31, 2016

A consortium has agreed to pay the Hungarian state HUF37bn (€117.8mn) for 100% of lender MKB, the Magyar Nemzeti Bank (MNB) confirmed on March 31.

Hungarian private equity fund Metis and Luxembourg-based Blue Robin Investments SCA will each buy 45% of MKB; Hungarian pension fund Pannonia will take 10%, the central bank said, confirming earlier reports. The MNB, which has overseen MKB - previously Hungary's fourth largest bank - since it was bought by the state in 2014, says the deal will close by June 30.

The deal is yet to be approved by the central bank's Financial Stability Board (FSB), Figyeloclaims. The MNB will have 60 days following a decision from the FSB to officially announce the new owner.

Speculation has risen recently that the MNB itself may have bought MKB via its six 'non-profit' foundations, using private equity funds as cover. However, both MKB’s CEO Adam Balog and MNB Deputy Governor Marton Nagy have rejected those claims.

Balog said on March 30 that Blue Robin Investments SCA groups Indian and Chinese private investors, but did not reveal their identity. Neither did he discuss the make up of Metis, which was created by private equity fund manager Minerva in February and launched with HUF31bn of registered capital.

The list of investors in Metis is not public. The senior officials featured on Minerva's website are all alumni of Raiffeisen Bank International's Hungarian unit. Balog said the central bank's foundations are not involved in Metis.

"Hungarian owners will be in majority, with a strong foreign ally,” was all he would say. The CEO moved from his post as deputy governor at the MNB to take the helm at MKB in July.

The government bought MKB from BayernLB for €55mn, plus a waiver of €270mn owed to the German bank, claiming it would reprivatise the bank soon. The German seller was forced to offload the lender due to a deadline imposed by EU state aid rules.

Hungary said at the time it would restructure the bank, which was struggling due to a large portfolio of bad commercial real estate loans. The MNB began buying toxic real estate loans this month via new bad bank MARK.

The European Commission gave the go-ahead for the Hungarian government to provide aid for the restructuring of the bank in December. According to that deal, MKB must be listed by the end of 2019. How Hungary will manage to float the bank if it does not control any of the shares is not clear.

Alongside a listing from Budapest Bank, which the state bought last year, an MKB IPO has also been earmarked as key to an effort to revive the Budapest Stock Exchange. The MNB bought control of the bourse late last year.