Hungary Buys Budapest Bank From GE

By Veronika Gulyas

BUDAPEST--Hungary signed a preliminary contract to purchase U.S. company GE's Budapest Bank, boosting Hungarian ownership to 50% of the banking system, Economy Minister Mihaly Varga said Thursday.

"We've taken another step toward strengthening the financing of the Hungarian economy," Mr. Varga said, hoping the purchase would boost lending and competition.

The purchase will be closed in June 2015, after a final due diligence process, and the price will also be published then, Mr. Varga said.

The buyer is a state-owned investor called Corvinus Nemzetkozi Befektetesi Zrt., and the purchase price is provided by state-owned investment bank MFB Zrt.

The minister confirmed that the state intends to take an active role in the Hungarian banking system by setting up a framework that fits the Hungarian economy.

Budapest Bank was for sale after its U.S. owner GE decided to divest its financial services segment across the globe. GE bought it in two steps in 1995 and 2001 from the state, the European Bank of Reconstruction and Development and minority stakeholders.

Budapest Bank is the 8th largest bank in Hungary based on its balance sheet, Mr. Varga said.

Write to Veronika Gulyas at [e-mail]; Twitter: @VeronikaGulyas1