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EBRD invests in Hungarian foreign trade bank
The European Bank for Reconstruction and Development (EBRD) today signed the subscription and shareholders' agreements for an equity investment in the Magyar Külkereskedelmi Bank Rt (MKB, also known as the Hungarian Foreign Trade Bank).
Jacques de Larosière, President of the EBRD, said: "This transaction marks the first bank privatisation in Hungary and launches the privatisation programme of the whole banking sector. The EBRD is extremely pleased to participate in this momentous step towards the promotion of the private sector and restructuring in Hungary."
The EBRD investment is in the form of the purchase of treasury shares and the subscription of newly issued shares which together represent 17 per cent of MKB's equity. Bayerische Landesbank (BLB), a major German bank with AAA rating and consolidated assets of DM 265 billion, is the strategic investor which will have a 25.01 per cent stake after the privatisation.
The proceeds from BLB's and EBRD's investment will substantially increase MKB's capital base and will be used by MKB to pursue its strategy to become a leading financial institution in central and eastern Europe, providing high quality client services.
Prior to the privatisation, 49 per cent of MKB's shares were owned by the Hungarian State Holding Company (AVRt). A number of private individuals and legal entities have minority shareholdings in MKB. According to the Hungarian Banking Act, the state is required to reduce its ownership in commercial banks to 25 per cent by 1997. BLB and the EBRD's purchase and subscription will help reduce the state's shareholding in MKB to the required level.
MKB was established in 1950. It was then one of two principal banks in Hungary, with the National Bank of Hungary, permitted to carry out international banking operations and foreign currency transactions. After the banking reform in 1987, MKB became a fully licenced commercial bank and developed corporate and private banking as well as capital market activities. MKB is now the fourth largest Hungarian bank by the size of its assets, while it is second in terms of shareholders' equity.
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