Government Spokesman Zoltán Kovács and Minister for National Economy Mihály Varga announced at a joint press conference in Budapest that on 4 December the State of Hungary and General Electric (GE) signed a preliminary contract on the state acquisition of Budapest Bank. The purchasing process is expected to be finalized by the end of the first half of 2015.

As the Minister said, the Government wants the Hungarian banking system to be the firm base of financial stability.

The Minister stressed with this decision the country edged one step closer towards a more stable Hungarian economy as the purchasing of Budapest Bank will intensify competition in the sector. He added that with this decision the Hungarian economy is regaining independence.

He emphasised that that modifying the ownership structure of the banking system is not a goal in itself for the Government, but an economic policy instrument. As he explained, foreign-owned banks have paralyzed the Hungarian economy and the market could not get credit. The Government’s aim is to invigorate lending, intensify competition and keep profits in the country.

Speaking about the background of the decision the Minister said that GE has decided to sell the bank after the portfolio of the credit institution had been assessed. The buyer is Corvinus Befektetési Zrt. and funding will be ensured by MFB (Hungarian Development Bank).

Although the Government will only later decide about the future of the bank, state ownership is not planned to be retained in the long term: Budapest Bank may be privately owned within the next one or two years, similarly to MKB, Mihály Varga pointed out.

He said the Hungarian banking system is thus nearing an optimal ownership structure. In 2010, the Government’s target was to have 50 percent of Hungarian ownership within the banking sector and through the purchasing of MKB and BB this objective has been achieved.

(Ministry for National Economy)