Hungary Pays $700 Million for GE Capital's Local Arm

By Margit Feher

BUDAPEST--A Hungarian state-owned bank has paid $700 million for a 100% stake in Budapest Bank Zrt., the local unit of General Electric Co.'s (GE) lending division, the prime minister's office said on Monday via state news agency MTI.

The buyer is investment firm Corvinus Nemzetkozi Befektetesi Zrt., part of state-owned investment bank MFB Zrt. and the acquisition follows a preliminary agreement signed last December.

The transaction took place at an exchange rate of 279.64 Hungarian forints to a dollar. The dollar-forint rate was at around 282.40 on Monday afternoon.

The purchase price, which MFB has financed through debt funded from capital markets, won't increase Hungary's public debt, the prime minister's office said.

Budapest Bank was put up for sale after GE Capital decided to divest its financial services segment globally. Hungary's government predicts the bank's consolidated net profit will exceed 10 billion forints ($35.7 million) in the first six months of this year.

The new owner doesn't plan any big changes to the bank's operation, business policy and operative management, the prime minister's office said.

Write to Margit Feher at [e-mail]; Twitter: @margitfeher