List of suitors for Hungary's MKB Bank reportedly dwindling

List of suitors for Hungary's MKB Bank reportedly dwindling
Hungary must list MKB by the end of 2019
By bne IntelliNews March 25, 2016

The list of suitors for Hungary’s MKB Bank has dropped from five to just two, local press reported on March 25. However, a senior official from the Magyar Nemzeti Bank refused to confirm the claim, or comment on speculation that Budapest is trying to pull the European Bank for Reconstruction and Development (EBRD) into the deal.

The list of potential bidders for MKB, which was bought by the state and put under the management of the central bank in 2014, now consists of just two private equity funds, Vilaggazdasag writes. The identity of the remaining suitors is unknown. The apparent disinterest of major banking groups in Hungary's fourth biggest bank likely reflects the uncertainty stalking the European sector, and also lingering regulatory risk in Hungary.

Marton Nagy, deputy governor of the MNB, refused in an interview with the newspaper to confirm the speculation. "There are foreign investors, and consortiums of Hungarian and foreign investors, interested," he claimed. "For MNB, the only important thing is that the chosen suitor – which can also be a private equity fund – is able to pay the purchase price and, consequently, run the bank properly.”

The government bought MKB from Germany's BayernLB for €55mn, claiming it would reprivatise the bank soon. 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; the MNB has said it wants to offload a majority stake by this June.

Alongside Budapest Bank, which the state bought last year, MKB is being lined up to make an IPO on the Budapest Stock Exchange, to kick off an effort to revive the bourse. The MNB bought control of the stock exchange late last year.

However, the state first needs to find a strategic investor to take on a majority in MKB. The reported drop in interest in buying the bank could be behind suggestions that the MNB hopes to pull the EBRD into a deal.

MKB's management – led by former MNB official Adam Balog – is in line to take up to 10% of the bank's shares, Vilaggazdasag claims, citing unnamed sources. Management also hopes the EBRD will buy a minority stake.

Should the multilateral lender enter the shareholder structure, it would offer huge assurance to potential strategic and equity investors. Hungary's battered banking sector is now starting to shed some of the fears surrounding it after the EBRD – alongside Austria's Erste Bank – signed off on a 'peace deal' with Budapest in February 2015, however, wariness remains.

Nagy refused to comment on the likelihood the development bank could take part. While the sources claim the EBRD has said it could be open to taking a stake in MKB, the international institution refused to comment on the issue for Vilaggazdasag.

Nagy, who is also chairman of the BSE, also told the newspaper that he would like to see the listing of Budapest Bank launched this year.

 

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