Erste Sees No Hungary Bad Loan Portfolio Sale as Assets Recover

  • Erste to discuss sale of individual assets with market players
  • K&H, Budapest Bank also projected no sales to Hungary bad bank

The recovering real estate market in Hungary is allowing the local unit of Erste Group Bank AG to avoid selling a bad-loan portfolio, joining some other lenders that are seeking arrangements other than the central bank’s bad bank program.

Erste is considering the sale of individual non-performing assets rather than handing the entire portfolio of commercial real estate bad loans to the central bank’s asset manager known as Mark Zrt., Erste Group spokeswoman Carmen Staicu said in an e-mailed response to questions. The volume of bad loans is "dropping quickly" due to improved market conditions, it said. KBC’s K&H and Budapest Bank have already ruled out sales to Mark, while UniCredit said its transfers probably won’t be significant.

"We are open to discuss individual NPL assets with all relevant market participants," Erste’s Staicu said. "But for now we are not targeting a commercial real estate portfolio sale given the limited amount left."

Mark, which will invite all financial institutions to take part in the bad asset purchase program on a voluntary basis, will make a binding offer for suitable portfolios, not individual assets, the central bank said. The company is set to start operations with an initial capital of 300 billion forint ($1 billion) this month, with plans to buy 60 percent of total non-performing real estate project loans. Eligible loans amount to about 500 billion forint, central bank Deputy Governor Marton Nagy said.

Raiffeisen Bank International AG’s Hungarian unit said last year it planned to sell assets about 100 billion forint in assets to either Mark or others. Some other banks haven’t disclosed their plans yet.

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