Equity
Hungary to buy MKB from BayernLB for EUR 55 million
Hungary buys MKB
By the sale BayernLB will be fulfilling all of the EU's main requirements regarding disposals of investments - and well before the deadline at that.
In return for the purchase price of EUR 55 million, BayernLB will waive EUR 270 million (cc. HUF 84 bn) in claims due from MKB, it said in a press release today.
The deal is set to close by September 2014.
On behalf of the Free State of Bavaria, which is one of the owners of BayernLB, State Minister Dr Söder expressed his approval of the sale to the Hungarian government by commenting that, "The negotiations were tough, but fair. In the end, we were successful with the most important issues. As opposed to other sales, there will be no outstanding sums and so the Hungary chapter will be closed for good. By doing away with this legacy, BayernLB is cleaning up its past some more."
"BayernLB is shedding a legacy asset in the interest of its owners. Now it can focus more closely on its core business and continue expanding it with the Bavarian savings banks," added Dr Ulrich Netzer, President of the Association of Bavarian Savings Banks.
"The MKB sale is a huge relief for us. It will put an end to a difficult chapter in our Bank's history and let us focus on the future," said BayernLB's CEO, Johannes-Jörg Riegler.
By selling MKB, BayernLB will be able to free up enormous portions of capital it has been using to cover risk. The transaction will therefore pull BayernLB’s hard core capital ratio (CET 1 ratio) down only by a negligible 0.3 percentage points, the bank said.
On a fully-loaded Basel III basis, that is, with all of the Basel III requirements factored in (including the silent partner contribution from the Free State of Bavaria), the BayernLB Group posted a very solid preliminary CET 1 ratio of 13.0% as at 31 March 2014.
"The negative impact under IFRS is within the range we've expected", said Riegler. "This will affect our core capital ratio only minimally", he added.
MKB is the last major investment BayernLB must part with as a condition posed by the EU Commission. The deadline for the disposal is the end of 2015. BayernLB has been the majority shareholder of the Hungarian bank MKB since 1994.
OTP was rumoured to buy MKB
Hungary's biggest bankOTP was moving closer to purchasing loss-making bank MKB from the German state-backed lender, three sources close to the matter said in early April this year.
Both OTP and public sector bank BayernLB have engaged in intense talks in recent weeks and are likely to reach an accord, the sources told Reuters. One of the unresolved questions separating the parties from a deal is the price, one of the sources added.
Rumours about local takeovers by OTP Bank started last May, after Chairman-CEO Sándor Csányi told InfoRadio OTP was ready to purchase two Hungary-based banks, adding that these were financial institutions that were about to pull out from the country. A few weeks before that he told the bank’s annual general meeting that there were a few potential takeover targets and they were not necessarily abroad.
According to press reports, OTP was eyeing to buy MKB, among other potential targets, but MKB’s parent bank, Bayerische Landesbank, said that for the time being it was conducting no advanced talks with any potential buyers about the sale of the bank.
"BayernLB has neither given exclusivity to any interested party, nor has it entered into advanced negotiations," it said.
Prime Minister Viktor Orbán has set a goal to have at least 50% of the banking sector in Hungarian hands. Back in April Morgan Stanley said this objective not far from being achieved.
"[...] one of PM Orbán’s stated aims is to bring domestic ownership of the Hungarian banks closer to 50%. Counting OTP as Hungarian, our analysis suggests domestic ownership is already around 40% and, withBayernLB obliged to sell MKB by 2015 (6%), this could be largely achieved without major structural changes," said Pasquale Diana, a London-based analyst at MS.
By the sale BayernLB will be fulfilling all of the EU's main requirements regarding disposals of investments - and well before the deadline at that.
In return for the purchase price of EUR 55 million, BayernLB will waive EUR 270 million (cc. HUF 84 bn) in claims due from MKB, it said in a press release today.
The deal is set to close by September 2014.
On behalf of the Free State of Bavaria, which is one of the owners of BayernLB, State Minister Dr Söder expressed his approval of the sale to the Hungarian government by commenting that, "The negotiations were tough, but fair. In the end, we were successful with the most important issues. As opposed to other sales, there will be no outstanding sums and so the Hungary chapter will be closed for good. By doing away with this legacy, BayernLB is cleaning up its past some more."
"BayernLB is shedding a legacy asset in the interest of its owners. Now it can focus more closely on its core business and continue expanding it with the Bavarian savings banks," added Dr Ulrich Netzer, President of the Association of Bavarian Savings Banks.
"The MKB sale is a huge relief for us. It will put an end to a difficult chapter in our Bank's history and let us focus on the future," said BayernLB's CEO, Johannes-Jörg Riegler.
By selling MKB, BayernLB will be able to free up enormous portions of capital it has been using to cover risk. The transaction will therefore pull BayernLB’s hard core capital ratio (CET 1 ratio) down only by a negligible 0.3 percentage points, the bank said.
On a fully-loaded Basel III basis, that is, with all of the Basel III requirements factored in (including the silent partner contribution from the Free State of Bavaria), the BayernLB Group posted a very solid preliminary CET 1 ratio of 13.0% as at 31 March 2014.
"The negative impact under IFRS is within the range we've expected", said Riegler. "This will affect our core capital ratio only minimally", he added.
MKB is the last major investment BayernLB must part with as a condition posed by the EU Commission. The deadline for the disposal is the end of 2015. BayernLB has been the majority shareholder of the Hungarian bank MKB since 1994.
OTP was rumoured to buy MKB
Hungary's biggest bankOTP was moving closer to purchasing loss-making bank MKB from the German state-backed lender, three sources close to the matter said in early April this year.
Both OTP and public sector bank BayernLB have engaged in intense talks in recent weeks and are likely to reach an accord, the sources told Reuters. One of the unresolved questions separating the parties from a deal is the price, one of the sources added.
Rumours about local takeovers by OTP Bank started last May, after Chairman-CEO Sándor Csányi told InfoRadio OTP was ready to purchase two Hungary-based banks, adding that these were financial institutions that were about to pull out from the country. A few weeks before that he told the bank’s annual general meeting that there were a few potential takeover targets and they were not necessarily abroad.
According to press reports, OTP was eyeing to buy MKB, among other potential targets, but MKB’s parent bank, Bayerische Landesbank, said that for the time being it was conducting no advanced talks with any potential buyers about the sale of the bank.
"BayernLB has neither given exclusivity to any interested party, nor has it entered into advanced negotiations," it said.
Prime Minister Viktor Orbán has set a goal to have at least 50% of the banking sector in Hungarian hands. Back in April Morgan Stanley said this objective not far from being achieved.
"[...] one of PM Orbán’s stated aims is to bring domestic ownership of the Hungarian banks closer to 50%. Counting OTP as Hungarian, our analysis suggests domestic ownership is already around 40% and, withBayernLB obliged to sell MKB by 2015 (6%), this could be largely achieved without major structural changes," said Pasquale Diana, a London-based analyst at MS.
