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Asset manager to start buying bad assets from banks in H2

Deals

The Hungarian Reorganisation and Receivables Management Company (MARK), established by the National Bank of Hungary (MNB) last November to buy bad commercial real estate loans and properties from banks, will initiate purchases from the second half of this year, the company's chairman and chief executive told Hungarian news agency MTI.

"At present, the company's organzation is being established; professional talks are underway on the principles and methods that will provide the basis for taking over bad property loans from banks from the second half of the year," said Csaba Kandrács.

MARK, which is owned by the MNB, will use up to HUF 300 bln to buy bad commercial real estate loans and properties with a book value of HUF 800 bln, the central bank said earlier. It will sell the properties later, at a "fair price", ensuring "optimum management" and "reorganization and restructuring" in the meantime, the MNB said.

Kandrács said MARK was not established to bail out banks, but to increase financial stability and boost the effectiveness of spillover from monetary policy decisions into the economy, in line with the mandate of the central bank.

"The goal is to provide incentives for appropriate lending and economic growth in Hungary," he said. "As a result of MARK's operation, commercial banks can use their financing for real lending, rather than for risk provisions," he added.

Kandrács said MARK was in "intensive and continuous" professional talks with the Hungarian Banking Association and was consulting with international bodies such as the European Central Bank, the European Commission and the International Monetary Fund to ensure MARK's mission is understood and it operates in line with the rules.

MARK is expected to operate for at most ten years. The lower threshold for its purchases will be HUF 500 mln for bad loans and HUF 200 mln for properties, Kandrács said. Bad loans are expected to make up two-thirds of MARK's portfolio and properties the rest, he added.

He said the MNB could decide to raise MARK's HUF 300 bln forint allocation "if interest is strong".

Lenders will participate in MARK's asset purchase program voluntarily, and MARK will buy the assets at market prices, after "thorough due diligence and a transparent valuation", Kandrács said. MARK could also offer loans or refinancing in individual cases if a bigger amount can be recouped, he added.

MARK's headcount will rise from 25 at present to 45 by mid-year and to 65 at year-end, he said.

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