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State could sell MKB early next year

Deals

The Hungarian state is planning to sell MKB Bank, which it acquired from BayernLB last year, by early 2016, chairman-CEO Ádám Balog told Hungarian news agency MTI.

The sale will not be a conventional privatization, as the transaction is bound by regulations in the bailout law, Balog said. The National Bank of Hungary, which exercises ownership rights in MKB, will assist MKB by all means necessary to achieve the target date, he added.

Balog said the clean-up of MKBʼs portfolio was underway. A number of big assets have already been sold to banks that earlier partnered with MKB on syndicated loans and some have been sold on money markets, he said. Assets in the portfolio that cannot be sold will be taken over in the autumn by an asset manager established by the bailout fund, he added.

Balog noted that the asset manager is an entirely separate entity from the Hungarian Reorganization and Receivables Management Company (MARK), established by the central bank last year to buy bad commercial real estate loans and properties from banks.

The clean-up process is being "closely monitored" by a number of European Union institutions, especially with a view to sale prices, Balog said. MKB has consulted with EU officials on a regular basis in the framework of the bankʼs reorganization plan, he added.

Asked to comment on the possibility of a merger of MKB and Budapest Bank, which the state also recently acquired, Balog said this course of action could present a big opportunity, but would be a long process.

MKB must focus on benefiting as much as it can from Hungaryʼs economic growth, he said. This could mean entering new markets, he added, mentioning new central bank rules that will require lenders to back mortgages with more long-term assets from autumn of next year.

MKB could enter the mortgage market with partners or on its own, Balog said.

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