Hungary has agreed to buy banking unit MKB for EUR 55 million (USD 74 million) from Bayerische Landesbank, National Economy Minister Mihaly Varga announced on Thursday.
Varga said the government’s deal with Germany’s state-backed bank fits its strategy of increasing Hungarian ownership in the domestic banking sector, and that the purchase was the first important step for sectoral consolidation. “Our hope is that MKB can regain its strong, competitive position within a year or two and then be sold on the market,” Varga added.
MKB reported losses of EUR 9 million in the first quarter, a huge improvement from EUR 61 million a year ago. Banks have been hit by a slew of state levies in Hungary since 2010, the latest being a law that requires them to refund forex loan costs. The agreement includes BayernLB waiving EUR 270 million in loans. “The MKB has cost BayernLB about EUR 2 billion since 1994,” BayernLB Chief Executive Officer Johannes-Joerg Riegler said in Munich.
The EU had ordered BayernLB – Germany’s second-biggest state-owned lender – to sell MKB by the end of 2015 to compensate for a government bailout needed to save it from collapse during the financial crisis. As MKB is headquartered in Budapest, and given Hungarian Prime Minister Viktor Orbán’s plan to have a banking industry that’s at least 50 percent locally owned, the deal was a shoo-in. “It’s clean cut,” Bavarian Finance Minister Markus Soeder said. “It’s another step towards resolving BayernLB’s legacy issues.” The sale is expected to close in September.
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