Hungary to Sell MKB Bank After Revamp by Central Bank - Prime Minister

By Margit Feher and Veronika Gulyas

BUDAPEST--Hungary plans to sell its recently purchased MKB Bank, possibly even taking it public through the stock exchange, after a reorganization and asset cleanup by the central bank over the next up to 18 months, Prime Minister Viktor Orban and central bank Governor Gyorgy Matolcsy said on Thursday.

"If the state owns a bank it gives rise to mistrust thus the government only takes up a role in it to support its reorganization and not for the sake of permanent state ownership," the premier said at a press conference.

Hungary's government has reached its goal that over 50% of the country's banking system should be in domestic hands, Mr. Orban said.

The reorganization and strengthening of the banking sector is now one of the main economic tasks of the governing Fidesz party during its second-term in power, Mr. Orban added.

Hungary is in talks with Austrian banks Erste Group Bank AG (EBS.VI) and Raiffeisen Bank International AG (RBI.VI), which both have major banking units in Hungary, about "strategic cooperation," the prime minister confirmed Thursday, but he declined to provide details.

The central bank governor Gyorgy Matolcsy said the central bank will provide MKB Bank with liquidity should it be needed and clean up its asset portfolio to prepare it for privatization, which may take the form of a public listing on a stock exchange.

The central bank aims to position MKB among the top three "best banks" by the end of the reorganization period, Mr. Matolcsy added.

Germany's state-controlled lender BayernLB sold its unprofitable Hungarian unit MKB Bank Zrt. for 55 million euros ($68.5 million) to the Hungarian government in July this year. The government also bought recently Budapest Bank Zrt. for an undisclosed sum from GE Capital, an arm of General Electric.

It's too early to say whether the government would want to merge MKB Bank with Budapest Bank, Mr. Orban said.

Write to Margit Feher at [e-mail]; Twitter: @margitfeher and Veronika Gulyas at [e-mail]; Twitter: @VeronikaGulyas1