State acquisition of bank exempt from competition audit

The exemption from GVH scrutiny applies to the merger of Budapest Bank with Corvinus Nemzetközi Befektetési, a unit of state-owned Hungarian Development Bank (MFB) "or with the credit institution that takes over all operations, total assets and liabilities, infrastructure ... of Budapest Bank", the government resolution, published in Tuesdayʼs official gazette Magyar Közlöny, said.

The resolution suggests that the government may replace Corvinus, which signed the contract on the purchase on February 13, as the buyer and future owner, with another bank. In speaking to the press, government sources did not rule out earlier that the new acquisition, Budapest Bank, could be merged with MKB Bank, which was acquired by the Hungarian state from BayernLB in September 2014.

Corvinus and MFB said at the time that the price of the deal will be finalized on the close of the transaction as the buyer set conditions to the settlement, without naming a deadline. When announcing the transaction in December, Economy Minister Mihály Varga said the transaction was expected to be closed by the end of June 2015.

A state guarantee for the Budapest Bank share purchase indicated a likely price tag, as it was issued for a forint loan worth a maximum of $700 mln (only slightly more than HUF 188 bln at the current exchange rate), to be granted to Corvinus by its parent MFB to finance the purchase. MFB will exercise ownership rights over Budapest Bank, the resolution said.

Budapest Bank is Hungaryʼs eighth largest bank. It had consolidated net assets of HUF 154.1 bln and total assets of HUF 905.4 bln at the end of 2013. The bank closed 2013 with consolidated net profit of HUF 13.1 bln. After-tax profit was HUF 14 bln.