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Following the licensing procedure, Hungary’s second-largest banking group will soon be established, with a consolidated value of more than HUF 740 billion, Minister Andrea Mager said in a statement below. 744 billion HUF). In the new banking group
The Hungarian State, through Corvinus Nemzetközi Befektetési Zrt.
The establishment of the “superbank” meets expectations and is even faster than that, as József Vida, President and CEO of Takarékbank, stated at the Portfolio Lending 2020 conference on September 15, that I would like to put it under the Christmas tree as a gift.
The identity of the new owners is completely logical, as they are the owners of the three currently existing banks, so there will be no substantial change in ownership. The above distribution of the ownership structure is all the more interesting, in any case, it corresponds to the order of the market share of the three banks according to the balance sheet total.
As for the total bank value of HUF 744 billion, it is worth evaluating it from three points of view: 1. The Hungarian state bought the Bank of Budapest for $ 700 million in 2015, the value of HUF 225.8 billion (= 744 x 30.35%) roughly corresponds to this: at the current dollar exchange rate, this would be HUF 220.3 billion. 2. In addition to this calculation, the total value of the superbank is 27% of the current consolidated value of OTP (market capitalization). 3. Based on the combined income-generating capacity of the three banks, the amount appears to be slightly high at first, especially during the coronavirus, but this may be subject to further analysis.
Based on the analysis of the international strategic consulting company involved in the transaction, the transaction It can generate tens of billions of guilders a year in synergy., which can significantly strengthen the competitiveness, growth prospects, profitability and stability of the banking group, increase the market value of banks, and further improve the quality of customer service. Due to its importance, Magyar Bankholding Zrt between large and stable European banking groups.
We write more about synergy opportunities and cost reduction constraints in our article below:
During 2021, Magyar Bankholding Zrt. It will develop a detailed merger schedule for the three banks, their milestones and a detailed business strategy.
This work is carried out by specialists from the three banks with the help of international consulting companies, and they are selected through internal bidding. While the new staff of Magyar Bankholding Zrt. Taking care of planning for the future and joint first steps, the professionals working at the three banks will continue to ensure the successful continuation of business activities, uninterrupted customer support and the introduction of new developments, products and services.
Banking experts have carried out the necessary legal, economic, financial and organizational due diligence in recent months, involving a number of large international consulting firms, and have evaluated the synergies between the operation of the three financial institutions as a banking group. Investment banking tasks related to the preparation of the transaction were performed by Rothschild & Co, and legal advisory tasks were performed by DLA Piper. One of the world’s leading consulting firms has also provided support to develop the strategic vision and synergy concept of the new banking group, they said.
Owners of the three banks On October 30, an agreement was signed to contribute its shares in the banks to Magyar Bankholding Zrt.. The financial holding performs prudential control and group management functions over the three banking groups from the actual completion of the contribution, as well as directing and managing the merger process.
For the time being, the banks will maintain their legal personality and operate as a separate entity, a separate brand until subsequent integration, but at the same time they will begin to exploit the synergies derived from the joint operation immediately after the contribution.
In the new banking group, the Hungarian State, through Corvinus Nemzetközi Befektetési Zrt., Acquires 30.95 percent of the MKB owners and 31.66 percent of the MTB owners when the contribution is made. The value of the bank shares to be contributed, which determines the proportional ownership of the financial holding shareholders of the three banks, is based on a detailed appraisal by Ernst & Young, an independent international consultancy, in accordance with international law and standards.
According to the law after the contribution A takeover bid will be made for MKB Plc. and Takarék Mortgage Bank Plc. (In the case of the latter, that is, the Takarékbank subsidiary, it may be really important due to the small stock market investors representing around 10% – ed.). In the next few days, Magyar Bankholding Zrt. And their owners will request the approval of Magyar Nemzeti Bank.
Magyar Bankholding’s senior management will also start operations. The functions of Chairman of the Board of Directors of the company will be performed by Zsolt Barna, and the functions of General Director will be performed by József Vida. Other members of the Council: Ádám Balog, Lélfai Koppány, Attila Tajthy. (Our cover photo shows József Vida, Koppány Lélfai and Ádám Balog from left to right).
The composition of the management, like the ownership structure, reflects the fact that it is a collaboration of (approximately) equal parts. The actual merger and merger and unification of branch networks, IT systems and brands can be a huge task that will take years, as such a merger will rarely take place in Hungary.
Our previous take on creating a superbank can be read here:
Excerpt from a statement by Minister Andrea Mager:
“In 2019, the Government commissioned me to propose the abolition of majority state ownership in Budapest Bank. The stability, competitiveness, efficiency of the national banking system and access to quality financial services for the Hungarian population were the criteria that I took into account to throughout our work. By leveraging the synergies between Budapest Bank, MKB and MTB, a long-term, crisis-resistant, capital-intensive banking group with significant growth potential will be established, which can play an important role in managing from the economic crisis caused by the coronavirus epidemic and on the restart of the Hungarian economy in improving the competitiveness of the Hungarian financial sector and preserving jobs, “said Andrea Mager, minister without portfolio for asset management national, according to MTI.
The minister emphasized that by joining the banking group, the Hungarian state will implement a value maximization strategy, as it will be able to obtain the expected benefits from the Budapest Bank in a more favorable market environment. The cooperation between the three banks has significant value creation potential, which in numerical terms means that Budapest Bank will receive 225 billion of the 744 billion shares created as a result of the transaction. At the same time, the transaction is in line with European regulatory needs, including the European Central Bank, which specifically urges further consolidation of the European banking sector through sustainable mergers.
Our previous interview with Andrea Mager, in which he also spoke in detail about the aspects of the Budapest Bank sale, can be read here:
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