Hungary doesn't want to swallow Budapest Bank, cannot spit it out either

Portfolio
Efforts by the Hungarian government to sell Budapest Bank acquired from General Electric have stalled, raising doubts about whether it will be able to meet a pledge it made in 2015 to sell majority shareholdings in the sector within three years, Reuters reported, citing banking industry sources.
After taking office six years ago Prime Minister Viktor Orbán nationalised several banks and implemented policies (e.g. the highest bank tax in Europe) to cut foreign ownership in the sector, aiming for at least 50% Hungarian ownership, Reuters reminded.

Under the agreement Hungary and the European Bank for Reconstruction and Development (EBRD) have bought 15 percent stakes in Erste Bank Hungary from its Austrian owner Erste Group Bank to help strengthen its capital base to support more lending.

The government also committed itself to transferring all its majority stakes in local banks to the private sector within three years. The state has already sold its holding in MKB, the country’s sixth largest bank by assets, which was acquired by a consortium of private investors for USD 134 million in June.

Meanwhile the government bought Budapest Bank from GE Capital for USD 700 million in 2015, and officials said the resale process would start in 2016.

But Orbán has yet to give any details on how the government plans to privatise Hungary's ninth-largest lender and the sources told Reuters the government is running out of time before it faces elections in 2018.

“The big issue is that the government wants to get what it paid and that is a hell of a multiple in today's market", one of the sources said.

Nothing is going to be decided by the end of this year, but you might get a statement indicating that the intention is to sell

, the source added.

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