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EBRD sells its 17.6 per cent stake in Magyar Külkereskedelmi Bank Rt. (MKB) to Bank für Arbeit und Wirtschaft AG
One of Austria's largest banks, Bank für Arbeit und Wirtschaft AG (BAWAG), with assets in excess of ATS 250 billion (ECU 18 billion), has bought a 17.6 per cent equity holding in Magyar Külkereskedelmi Bank Rt. (MKB) from the European Bank for Reconstruction and Development (EBRD).
Peter Reiniger, Director of the EBRD's Hungary team, said: "Selling the EBRD's stake in MKB to BAWAG will strengthen MKB's position in financing Hungarian-Austrian trade, Hungary being Austria's third-largest trading partner. As one of the largest investors in the Hungarian banking sector, the EBRD has played an important role in developing a market for financial services in Hungary as well as in other countries of central and eastern Europe."
Almost four years ago, the EBRD in conjunction with Bayerische Landesbank Girozentrale (BLB) participated in the first privatisation of a state-owned Hungarian bank with its initial equity investment. By selling equity in MKB and issuing a capital increase via a private placement, the Hungarian Government's stake was reduced to 26 per cent. At a later stage, the remaining shares owned by the Government were sold to BLB, making MKB a fully privately owned institution.
The EBRD's investment in MKB catalysed further privatisations in the banking sector. Over the last two years, the EBRD has taken part in two more privatisations in the Hungarian banking sector, acquiring parts of Budapest Bank (with GE Capital) and Kereskedelmi es Hitel Bank (with Kredietbank and Irish Life). Today, almost all the large domestic banks in Hungary have been privatised, either to strategic investors such as Western banks and their consortia, or via stock market offerings.
As a financial investor, the EBRD, together with BLB as strategic investor, has been highly instrumental in improving MKB's operating efficiency and portfolio quality as well as strengthening its capital base. MKB has continued to demonstrate strong client orientation, improved its financial performance and increased market share. It has firmly established itself as the leading provider of commercial banking services to the largest industrial and trading companies in Hungary, and also strengthened other business lines, including private banking, stockbroking and pension fund management.
Today, MKB is ranked as the second-largest commercial bank in Hungary by total assets and equity and the third-largest bank by total profits.
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