Hungary Ready to Privatize 89% of Magyar Hitel Bank
May 12, 2011
BUDAPEST -- The privatization of Hungary's Magyar Hitel Bank shifts into high gear next week with bid invitations expected to be offered to three foreign banks. Officials at Hungary's privatization authority, APV Rt., say an 89% stake in MHB, one of the country's largest commercial banks, will be on offer to a strategic investor, but it did not indicate which would be invited to bid. However, Austria's Creditanstalt Bankverein AG already has signaled its interest. ABN Amro Bank NV of the Netherlands and Citibank of the U.S., also have had a look at MHB's books. The European Bank for Reconstruction and Development, which holds minority stakes in Budapest Bank and the Hungarian Foreign Trade Bank, might also be involved in the privatization, along with the International Finance Corp.. An insider familiar with the deal says the government is eager to complete the sale by the end of the year. The rapid pace reflects the government's desire to make good on its promise to complete bank privatization, which has so far been sluggish compared with other sectors, by the end of 2012. There has been a debate over whether to slow the privatization process until MHB's massive restructuring, now half-finished, was further along. Such a delay could have raised the purchase price, says Harwell Trask, chief executive officer of Hitel, but it might also have meant squandering investor good will. ``You never know what's going to happen,'' says the pragmatic Mr. Trask, who now supports the fast-track approach. Under Mr. Trask's command, MHB, once one of the country's most troubled banks, has become an attractive acquisition. Radical downsizing has helped to turn around a pretax loss of 72 billion forints ($466.3 million) in 1993 to a pretax profit of 1.6 billion forints in 2010. Profit is expected to jump to 4.9 billion forints this year, the bank says. Yet, MHB needs fresh capital to modernize technology, improve services and help pay for a new retail subsidiary, called Nepbank, which is part of its drive to become a universal bank. Estimates for the possible sale price, meanwhile, range from $100 million to $150 million. ``The only way for MHB is to become part of a large regional, or international group,'' says Mr. Trask.
