MKB Bank Zrt., Hungary’s fifth-largest lender, plans to sell as much as a 30% stake on the Budapest Stock Exchange (BSE) to meet terms of a European Union-sanctioned bailout, Chief Executive Officer Adam Balog told Bloomberg in an interview published on Thursday. According to Portfolio’s calculation, MKB would be the sixth largest BUX member now.
The lender may list about 20% to 30% of shares on the stock exchange next year, Balog told Bloomberg in an interview on Wednesday in his Budapest office. The exact size and timing of the sale will be determined by the bank’s owners, he said.
We’re planning a significant listing and I’d like to do it earlier than later, for example at the start of 2019. For sure we’re going to sell a minority stake
, said Balog.
After two profit-making years, MKB needs to go public, by the end of 2019 at the latest, according to a commitment made to the European Commission in exchange for a state bailout. MKB is the fifth-biggest by total assets in Hungary behind OTP and the local units of UniCredit, KBC Group and Erste Bank. Although it is barred from buying lenders until the end of 2018, it may eventually consider domestic acquisition targets after that, including Budapest Bank, which the government bought from GE Capital in 2015, if it was to go on sale, Balog said.
Balog’s key remarks to Bloomberg were the following:
MKB Bank may list about 20-30% of shares on the stock exchange next year;
The exact size and timing of the sale will be determined by the bank’s owners;
MKB is planning a significant listing and Balog would like to do it earlier than later, for example at the start of 2019;
MKB is certain to list a minority stake;
“We believe in humble, modest growth. We don’t want to do something that later doesn’t prove sustainable."
If Budapest Bank is put up for sale by the state, MKB will consider buying it;
MKB is also interested in partnerships with private-equity funds, pension funds, insurers and fintech companies.
MKB posted its second consecutive year of profit in 2017 after six years of losses (hundreds of billions of forints) ran the former Bayerische Landesbank unit into the ground.
MKB’s ownership structure is sporadic. Its largest owner is private equity fund Metis, managed by Konzum, an interest of Lőrinc Mészáros who is a key ally of Prime Minister Viktor Orbán. Metis holds a 45% stake in MKB, followed by Blue Robin, an indirect interest of Ádám Balog and Tamás Szemerey, a cousin of National Bank Governor György Matolcsy, one of Orbán’s strongest allies, with 33% shareholding.
If MKB were listed now, its market capitalisation would be nearly HUF 210 billion, calculating with the valuation of its biggest rival OTP (at 1.5x P/BV), which would make it the 6th largest BUX member (at market value) between Opus and Émász. There would be HUF 40-65 bn worth of MKB shares traded on the BSE.
