Hungary to Buy GE’s Budapest Bank as Cabinet Boosts ControlAndras Gergely and Edith Balazs
Hungary will buy GE Capital’s Budapest Bank, the country’s eighth-largest bank in terms of assets, in the latest move by Prime Minister Viktor Orban to boost domestic control over the financial industry.
The government plans to close the deal by June 30, Economy Minister Mihaly Varga told reporters today, without disclosing the price. Corvinus Nemzetkozi Befektetesi Zrt., a unit of state-owned development bank MFB, will be the buyer, with MFB providing a loan for the transaction.
“This decision boosts economic sovereignty,” Varga said. “It’s desirable for the majority of the Hungarian banking industry to be in local hands.”
The acquisition is part of the Orban administration’s strategy to spur lending after banks restricted credit following the introduction of Europe’s highest bank levy. The government also forced banks to refund customers with as much as $4 billion for lending practices deemed “unfair.”
Hungary earlier this year bought MKB Bank Zrt. from Bayerische Landesbank, putting the majority of banking industry into local hands.
The cabinet hasn’t decided yet whether to combine Budapest Bank with MKB, Varga said. He added the government wanted to eventually sell both banks to private owners from Hungary.
“It makes sense to sell the bank in one or two years,” Varga said.
OTP Bank Nyrt., Hungary’s largest bank, competes mostly with foreign banks, including Erste Group Bank AG, Raiffeisen Bank International AG, UniCredit SpA, Intesa SanPaolo SpA and KBC Groep NV.
For GE, the sale advances Chief Executive Officer Jeffrey Immelt’s effort to shrink its finance arm and expand its high-margin manufacturing operations. The company hopes to reduce the share of earnings from GE Capital to 25 percent of the total, said Susan Bishop, a spokeswoman for the unit.
The deal with Hungary is the latest foreign bank divestiture for Fairfield, Connecticut-based GE, which agreed in June to sell its Nordic business to Spain’s Banco Santander SA. GE notified Polish financial regulators in October that it plans to sell its banking unit in that country, Bank BPH SA.