A historic merger has been prepared in the Hungarian banking sector

A decade of consolidation

Three different stories preceded this year’s developments:

• In 2013, poor efficiency The Hungarian savings cooperative sector and the then FHB Bank with a series of regulatory steps,
• In 2014, you racked up hundreds of billions in losses in previous years. MKB bench a purchase of a public bank and a resolution initiated by a central bank,
• And in 2015, permanent profitability Bank of Budapest and a public bank purchase

embarked on the path of transformation. In the years that followed, many saw close to the Orbán government and in the banking market that the path of these three great players would one day unite. In addition to the completion of the five-year restructuring of MKB Bank last December and the completion of the seven-year integration of the savings cooperatives in June this year, the coronavirus crisis may have played a role not only in accelerating of this process in 2020, but also finally to make it public. actors with the intention of merging.

TOP10 story
As every year, the writing of the Portfolio compiled the most relevant events and news of the year. This article is also one of 10.

This year saw three major announcements:

• On May 15, Takarék Group and MKB Bank announced their plans to merge, and on May 26, Budapest Bank announced their merger and announced the joint incorporation of Magyar Bankholding Zrt., Incorporated for this purpose.
• On October 30, 2006, an agreement was reached on the ownership proportions of the future “superbank” and on the owners of the three banking groups that contribute their bank shares to the joint holding company: according to this, the Hungarian state as owner from Budapest Bank through Corvinus International Investment Ltd., MKB owners acquire 31.96 percent and MTB Takarékszövetkezeti Bank owners acquire a 37.69 percent stake in the company valued at HUF 744 billion with the participation of national and international consultants (these figures also ensure that Budapest Bank is also “recovering” the purchase price of $ 700 million from the state five years ago),
• On December 15, 2021, Magyar Bankholding began operating with the permission of Magyar Nemzeti Bank, after Zsolt Barna was elected to replace Ádám Balog at the General Meeting of MKB Bank the day before with effect from January 1 from 2021 as József Vida, Budapest Bank is run by Lélfai Koppány). After the contribution, the financial holding company will in the future carry out prudential control and group management functions over the three banking groups, as well as planning and managing the merger process that optimizes the operation of the banks.

A detailed merger schedule and business strategy will be developed next year. For the time being, Budapest Bank, MKB and Takarék Group will retain their independent legal status and will operate under a separate brand until the future merger process.

However, immediately after the contribution, the synergies derived from the group’s operation began to be exploited, which is facilitated by the fact that the government classified the merger as a concentration of national strategic importance, so it did not is investigated by the Hungarian Competition Authority.

A new national champion is being built

During the year, we analyzed the possible motivations and expected consequences of creating a superbank in several of our articles (such as here and here). The meaning of the merger is seen below:

• By the end of 2019, Hungary’s sixth (Takarékbank), eighth (MKB Bank) and ninth (Budapest Bank) balance sheet banks will merge, creating Hungary’s second largest credit institution (potential “national champion”) after of OTP, with a total balance of almost HUF 6,000 billion and With a loan portfolio close to HUF 4 billion,

• The merger of the big three banks offers significant opportunities for revenue and cost synergy, so if successfully implemented, the banking sector, the credit market and the savings market as a whole can generate significant efficiencies (this will require decisions sensitive in the branch network and workforce, the cost base must be reduced by one third in a sustainable way to create a large bank that operates efficiently in competitive competition with OTP,

• A versatile and truly universal financial group can be formed by having the fourth largest retail bank account manager, Budapest Bank, which is strong in the SME and leasing market, MKB Bank, which is at the forefront of the banking market corporate and private sector, and the mortgage and SME market, Takarékbank, which has extremely strong positions in agriculture and rural financial services, will merge,

• This is the largest M&A operation of the financial institution in 2020, the sale of Aegon Hungary in the financial sector (to the Austrian Vienna Insurance Group, which is already present in Hungary through Union Biztosító).

In our cover photo from left to right: Lélfai Koppány (Budapest Bank), Vida József (Takarékbank) and Balog Ádám (MKB Bank Bank).