Hungarian state looks to buy stake in Erste Bank unit

BUDAPEST — Hungary and the European Bank for Reconstruction and Development are each seeking to acquire 15-percent stakes in the Hungarian subsidiary of Austria's Erste Bank, Hungary's prime minister said yesterday.

Prime Minister Viktor Orban said Hungary wanted to acquire the same size stake as the EBRD "as long as we can agree on a price."

Erste, one of Hungary's largest retail banks with 900,000 clients, nearly 3,000 employees and 128 branches, said it would launch new loan programs over the next three years totaling 550 million euros ($622 million) to "increase its support for the Hungarian economy."

Orban also announced that Hungary's special tax on banks will be cut next year by around 60 billion forints ($221 million), a 40 percent drop on 2015, when the tax is expected to generate revenues of around 144 billion forints ($530 million).

Orban said the bank tax would be cut in the following years, too, in return for banks increasing their activities in Hungary.

Orban has made boosting Hungarian ownership in the banking sector a key objective. The state last year announced it was buying Budapest Bank from General Electric and the Hungarian Foreign Trade Bank from Germany's Bayerische Landesbank.

According to the deal signed yesterday with the EBRD, Hungary "does not intend to take direct or indirect majority ownership stakes in systemically important local banks" and will transfer the majority stakes it holds in local banks to the private sector within three years.

EBRD president Suma Chakrabarti said the agreement with Hungary was a "good start to open a new chapter for the banking sector" and said the intention to buy the stake in Erste still needed approval in the "next few weeks" from the EBRD board.