The state of Hungary has reached an accord on purchasing MKB from Bayerisiche Landesbank. The current owner has agreed to sell 99 percent of MKB shares to the state of Hungary and increase capital by EUR 270 million prior to the transfer.

The Hungarian banking sector requires a significant overhaul, as the financial crisis has made it clear that the ownership structure of the banking sector cannot be considered to be neutral from the aspect of financial stability and lending. The foreign owners of Hungarian subsidiaries have during the crisis withdrawn massive financial resources from the country which measure adversely affected forint stability while it caused lending to Hungarian companies to come to a near standstill.  As a consequence, a mainly foreign-owned banking sector is not only slowing recovery, it is deepening the crisis through the withdrawing of resources.

Having recognized such processes obliges a responsible Government to formulate a new strategy and, accordingly, the Government is aiming to increase the share of Hungarian ownership within the Hungarian banking sector.

The agreement concluded between the Government of Hungary and Bayerische Landesbank fits in well with this strategy. The purchasing price of EUR 55 million does not constitute a large burden on the state budget. It has been a well-known fact that MKB is on sale and in accordance with an EU agreement the Free State of Bayern has committed itself to parting with MKB until the end of 2016. The Government endeavours to turn MKB into an active and profitable bank, therefore retaining current and increasing the number of future customers is a priority.

Photo: kormany.hu archive

(Ministry for National Economy)