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Exclusive: Hungary to sell MKB Bank, domestic buyers to own majority - CEO

Stock MarketsMar 30, 2016 02:30PM ET
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Exclusive: Hungary to sell MKB Bank, domestic buyers to own majority - CEO

By Krisztina Than and Gergely Szakacs

BUDAPEST (Reuters) - Hungary's state-owned MKB Bank will be sold to a consortium of domestic and foreign equity funds, with Hungarian owners getting a majority stake, the bank's chief executive Adam Balog told Reuters on Wednesday.

The sale is pending approval by the central bank's Financial Stability Council, Balog said.

The National Bank of Hungary took control of MKB, the country's sixth-largest lender by assets, last year after Prime Minister Viktor Orban's right-wing government bought it from Germany's BayernLB in 2014 for 55 million euros ($62 million).

The purchase of MKB was a key element of Orban's strategy to have more than half of country's banks in Hungarian ownership, after his government squeezed foreign banks for six years with a special tax on banks and policies aimed at helping borrowers.

MKB's distressed assets have since been spun off and last year the European Commission approved its restructuring plan.

Balog said that a Hungarian private equity fund called Metis will buy a stake of between 40 and 50 percent of MKB. He did not reveal who the investors in the fund were, but said the central bank's foundations were not involved.

Metis was recently launched with a registered capital of 100 million euros, according to a statement by its manager, Minerva Fund Management, on Wednesday. It did not reply to questions by email or by telephone.

Balog said a Luxembourg-based fund called Blue Robin Investments SCA, which he said grouped Indian and Chinese private investors, will buy between 40 and 50 percent and Hungarian pension fund Pannonia (BU:CIGP) will buy about 10 percent. Reuters was not able to contact Blue Robin Investments for comment. Pannonia could not be reached for comment.

Metis and Pannonia together would own more than 50 but less than 60 percent of MKB, he added.

"Hungarian owners will be in majority, with a strong foreign ally," Balog said.

He declined to reveal the price, but said the winning consortium had been selected from three bidders. He did not name the other two bidders, but said both were private equity funds specialized in the financial sector.

"They (the winning consortium) gave the best price," he said, when asked what the decisive factor had been.

EBRD INVESTMENT OPPORTUNITY

He said the European Bank for Reconstruction and Development (EBRD) also talked with all the potential buyers and may still be involved.

"Whether the owners decide to actually get the EBRD involved or not, I don't know at this stage, but I would support the EBRD to appear among the owners," Balog said.

An EBRD spokesman told Reuters: "the EBRD discussed the investment opportunity with a number of potential bidders but did not itself submit a bid."

Balog said that MKB would report a loss for 2015, due to big write-downs on non-performing commercial real estate loans, but aimed for a profit of at least 5 to 10 billion forints ($36 million) in 2016.

"If we look ahead to the next three to five years, we would like to be among the top three banks in Hungary based on size," he said. Hungary's top banks are OTP (BU:OTPB), K&H Bank (BR:KBC) and Unicredit. (MI:CRDI)

MKB also wants to list some of its shares on the Budapest Stock Exchange in 2019.

($1 = 0.8832 euros)

($1 = 277.9900 forints)

Exclusive: Hungary to sell MKB Bank, domestic buyers to own majority - CEO
 

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