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30%

overall cuts to utility costs planned

Photo: Gergely Botár/kormany.hu

The more you challenge us, the more of your profit you’ll lose: this is what Hungary’s government told the energy industry, which now seems bound to swallow the costs of an extensive reduction to household expenses. 08-09

NEWS

SOCIALITE

Criticized constitution

Budapest dreams

Shrugging off all objections in Hungary and around the world, the government has changed the country’s constitution yet again, this time including perhaps the most controversial passages yet concerning its vision for the future of Hungarian society. 03

Dreaming big is great, but living the dream is a whole different story. The BBJ tallies and explores the biggest dream developments of Budapest city leaders, some recent and some not so recent, that are still waiting to come true. 26-27

OPINION

European solidarity Essay by Péter Balázs, former Foreign Affairs Minister and a former Member of the European Commission. 06

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Budapest Business Journal | March 22 – April 04

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THE EDITOR SAYS

RETURN TO ARMS Prime Minister Viktor Orbán’s government has never been known to be exceptionally friendly towards the business sector, especially companies that are foreign−owned, but tensions seemed to be easing last year. Having concluded several strategic agreements with major players in the economy, most of them foreign, the government offered stability to companies, even those such as Tesco, previously hit by extra taxes earlier. Although in an ideal world a fair and potentially prosperous environ− ment shouldn’t need to be guaranteed in individual con− tracts because it’s just the way things are, it seemed that a pro−business opening was on the way. That was until Orbán declared war on the energy sector and all those who take its side, and issued a call to arms to the gen− eral public. When the companies objected to the idea that they should bear the costs of the government’s latest master plan to greatly reduce household utility fees and won the related court case, their position only got worse. Orbán’s diatribe against the energy sector and the fact that it “dared” challenge the central decision to give up

on its profits ended with a pledge to punish the industry by slashing an even bigger part of its profits. This should be fair warning to any business or industry that gets in the way of the government’s political goals. Perhaps even more disturbingly, Orbán went as far as to question the independence of the court that backed the energy firms’ lawsuit, calling the decision “scandal− ous” and accusing the court of serving foreign interests. That is hardly a diplomatic message regarding one of the branches of power from a country’s prime minister. Hardly a year before the next general elections, the gov− ernment is back to its old ways when it simply goes and changes the rules anytime it finds itself losing. Now it’s the energy sector, the other utilities are next and there is no way of knowing what will follow. A handful of big firms have received a written prom− ise that they will be left alone. But as with the bank tax, they would be wise to remember that promises can be broken, and that, as the proverb would have it, all is fair in love and war.

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When Moody’s Investors Service announced yet another downgrade to four Hungarian banks, one of them, MKB said enough is enough and terminated its contract with the rating agency. The bank stated that it fully disagrees with the rater’s take on key aspects. Moody’s was the first to cast Hungary’s sovereign debt rating into junk category in 2011, shortly to be followed by its peers Standard & Poor’s and Fitch. At the time, officials were so worried about the impact of a downgrade that they were even willing to announce going to the IMF for aid, seeing that negative market reac− tion could start a panic that had the potential to push the country into default. Now, not too much later, the same officials in Budapest eas− ily shrug off any comments that any of the big rating firms make, saying nobody cares anymore what they have to offer. While it doesn’t take much of a search to find something to criticize about the Hungarian government and its oper− ations, events are proving them to be right on this account. Standard & Poor’s is undergoing a lawsuit in the U.S. on

charges of fraud, because it put top ratings on subprime mortgage bundles, the very ones that led the global econ− omy to collapse in 2008. The European Union has imple− mented several legal changes to regulate the rating agen− cies because of their role in the Lehman Brothers crisis as well as their questionable calls before and during events in the eurozone crisis. There have even been calls to set up an alternative, EU−based rating agency. In Hungary, demand for the country’s “junk” bonds is booming at home and abroad. The state debt manager has conducted a heavily oversubscribed foreign currency issue, regular auctions where the offering isn’t covered are impos− sible to find and the short−term three−month treasury bill’s average yields just reached a historic low. As the crisis continues, it has become obvious that the rating agencies are no more the omnipotent entities that once could decide the fate of a country. Whether they will again become a useful agent in how economies work is up to them, and whether they have retained enough of their once strong reputations in their clients’ eyes.

BBJ

1 News

NEWS

More short−term debt is risky

OPINION

Why Cyprus is good for Europe

macroscope

HUNGARY DEFIANTLY REVISES ITS CONSTITUTION After a few months of relative peace following the tumultuous past few years, Hungary once more sees its commitment to fundamental civil liberties and the rule of law being questioned in the wake of a controversial modification of the constitution.

STORY HIGHLIGHTS ■

Fidesz passes controversial constitutional changes ■ Protests erupt at home and abroad ■ Government dismisses critique

differently depending on whom one asks. “The government has already proven its deep commitment to uphold the rule of law as well as common European values and has taken several steps to affirm this commitment,” Csaba Fodor, an analyst at the Nézőpont political research insti−

be looking to take steps against Hungary if the changes are deemed to go contrary to European Union laws and values, the analysts don’t expect the words to be fol− lowed by a bite. “Just as before, the most likely course of action against the Hungarian government

Hungarian officials are again called to defend yet another major effort from the government to mold the framework of how the state and the legal system operate through a fourth extensive amendment to its “rock−solid” constitution. The changes include cementing the requirement for Hungarian college stu− dents receiving scholarships to stay in Hun− gary after their studies, defining family in a way that outlaws gay marriage, banning the Constitutional Court from taking into account its rulings of the past 23 years in decision−making, limiting political cam− paigning and making it punishable for the homeless to be living on the streets. The move sparked demonstrations citing the violation of fundamental civil liberties as well as the fact that the measures had already been struck down by the Constitutional Court. The government said the jurors’ objec− tion was based on a mere technicality that has been remedied by adopting the criticized pas− sages to the basic document. HISTORY REPEATING Finding parallels to the events of March in recent history is by no means a difficult task. Prime Minister Viktor Orbán has already defied extensive calls from home and abroad to reconsider controversial legal changes in 2011 and 2012 when parliament ratified a new central bank act and then introduced a lowered mandatory retirement age for judges. The resulting jitters among market par− ticipants regarding legal security in Hun− gary, augmented by heightened worries about Greece and the future of the eurozone, sparked a sell−off and pushed Hungarian assets to record lows. As a result, the govern− ment was forced to backtrack on its plans and

Photo: Zsolt Szigetváry/MTI

GERGŐ RÁCZ

PROTESTERS IN BUDAPEST DEMONSTRATING AGAINST THE LATEST CONSTITUTIONAL CHANGES

move ahead in its strained courtship of the International Monetary Fund and the Euro− pean Commission for a financial safety net. Now, with uncertainties high yet again at the start of former economy minister György Matolcsy’s term at the helm of the National Bank of Hungary, the government has rati− fied the constitutional changes while ignor− ing widespread calls to do just the opposite. On top of that, there is now the worri− some situation about shaving bank depos− its in Cyprus that has led to the forint hit− ting a 14−month low against the euro above 308 and CDS, the cost of insuring investments in a country’s bonds, jumped 22 points to 355 according to figures from independent data provider CMA; it had Hungary at 281 points in late 2012.

tute, told the Budapest Business Jour− nal. As such, he doesn’t expect any seri− ously painful implications of the events as long as the debate stays professional and doesn’t get more politicized. Senior analyst at Political Capital Attila Juhász also doesn’t expect any major short−term backlash for the gov− ernment, but notes that the “freedom fight” rhetoric it has pursued is prone to have consequences in the long−term. “If sanctioning Hungary as a result [of the constitutional changes] becomes a reality, then surely many would blame Fidesz,” Juhász said, citing polls that show two−thirds of the population already believe that the country’s affairs are going in the wrong direction.

WEIGHING REPERCUSSIONS The constitutional changes and their potential impact are naturally considered

PRESSURE POINTS Despite the fact that the European Com− mission immediately warned that it would

will be political pressure,” Juhász said. He added that as a legal avenue, the only option for the European Commis− sion would be a procedure initiated under Article 7 of the EU’s charter that would entail suspending Hungary’s vot− ing rights in the bloc. Such severity in sanctions is unprecedented. Fodor agreed that any response on an international scale would be political, since the European Commission is already in a precarious situation considering how it has handled the eurozone crisis and will therefore be reluctant to take such drastic action against a member state, especially one that has taken considerable measures to get its economy in order. “Furthermore, initiating the suspension of Hungary’s voting rights could only come with the unanimous consensus of all member states, which will surely not happen,” he said.

04 News

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NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

NEWS

IN BRIEF

Budapest Business Journal | March 22 – April 04

Help is on the way! Do not leave your vehicle! If you’re running out of fuel, go and sit in another car! Interior Ministry An encouraging if slightly confusing text message from the Interior Ministry, sent to clients of mobile service providers Magyar Telekom and Vodafone (Telenor refused to carry the message free−of−charge), during the weekend when a snowstorm caused severe turmoil on the roads of the country

MARCH BLIZZARD LEAVES COUNTRY PARALYZED

Photo: Csaba Krizsán/MTI

Unusually harsh weather conditions brought snowstorms that caused serious disruptions to traffic on motorways and in rural locations, leaving numerous motorists stranded on the long weekend of March 15−17. Almost all events related to the 1848 Hungarian revolution memorials of March 15 were called off. The Interior Ministry received criticism for its perceived sluggishness in reacting to the situation and its suggestion made to travelers in trouble that they get into another vehicle should their fuel run out. Interior Minister Sándor Pintér declared a state of emergency while rejecting accusations that the state wasn’t on top of the situation.

ECONOMY CITY ANALYSTS CUT HUNGARY GDP FORECAST ON WEAK Q4

Hungary’s economy is now likely to remain mired in recession this year after starting the year on a weaker− than−expected footing, London−based emerging markets analysts said. In their CEEMEA Spring Macro Outlook report released to clients in London, Morgan Stanley’s economists said their new forecasts see the Hungarian economy contracting by 0.5% in 2013, down from their previous expectation of 0% GDP growth. RAISING PROPORTION OF SHORTTERM DEBT IS RISKY

Hungary’s Debt Management Agency (ÁKK) thinks it would be risky to raise the proportion of short−term govern− ment securities, the size of debt which has to be renewed annually should rather be reduced, ÁKK deputy CEO László András Borbély said at a press conference. With regard to a recent State Audit Office suggestion that funds should be diverted from Nation− al Bank of Hungary two−week bonds – the central bank’s main sterilizing instrument – into short−term govern− ment papers, he said that reducing the average maturity of government debt would involve signiﬁcant risk, as it would result in a sudden rise in renewal demand. HUNGARIAN FDI IN CYPRUS EXCEEDS €1.722 BLN

Hungarian foreign direct investment in Cyprus came to €1.722 billion at the end of 2011, the latest data from the National Bank of Hungary shows. Excluding FDI by “special− purpose vehicles/entities” – compa−

nies established for project ﬁnanc− ing, securitization or the separation of assets, as well as to make use of tax advantages – the total came to €901 million. In forint terms, Hun− garian FDI in Cyprus reached HUF 535.8 bln – or HUF 280.4 bln exclud− ing special−purpose vehicles/enti− ties – at the end of 2011. A recent scheme to introduce levies on bank deposits in Cyprus as part of a bail− out plan has buffeted global markets. INDUSTRIAL OUTPUT DECLINE SLOWS ON AUTOMOTIVE INDUSTRY EXPANSION

New automotive industry capacity caused the decline in Hungary’s industrial output to slow in January, detailed data by the Central Statistics Office shows. The second reading of the data shows output of the motor vehicle sector jumped 17% in January from the same month a year earlier. Headline output fell an unadjusted 1.4% in January, slowing from a 7.6% drop in December. The deceleration came as German carmakers Daimler and Opel stepped up production and added capacity at their local plants. CONSTRUCTION SECTOR DECLINES 4.1% IN JANUARY

Output of Hungary’s construction sector fell 4.1% year−on−year in January according to both unadjusted and workday−adjusted ﬁgures with the building sector contracting but the civil engineering segment increasing slightly, the Central Statistics Office said. The January decline came after a 3.1% decline in December and a 5.9% contraction last year. The buildings segment contracted 6.8% in the 12 months to January and was down a seasonally and workday−adjusted 4.7% from December.

Numbers in the news

1,548 new companies were established in January−February, down from 10,110 in the same period a year earlier, fresh data compiled by Ceginfo.hu shows.

34.4 BILLION EUROS − MNB’s international reserves at the end of 2012, enough to cover five and a half months of imports and 1.7 times more than Hungary’s short− term external debt, Economy Minister Mihály Varga said.

POLITICS POLL SHOWS FIDESZ AHEAD WITH STRONG LEAD

The governing Fidesz party would claim 32% of the overall vote if elec− tions were held this weekend, making it a clear winner, a newly published poll from the Nézőpont research institute found. The socialist MSzP came out a distant second with support of 11%, Followed by former Prime Minister Gordon Bajnai’s Együtt 2014 at 5% and the green LMP with 4%. The Nézőpont records show that Fidesz has topped Hungary’s approval ratings for 79 months in a row with the February poll, an all−time record. MINISTER ASKS FOR RETURN OF STATE AWARD

Human Resources Minister Zoltán Ba− log has asked a new recipient of a high state recognition presented for excel− lence in journalism to return his award in the wake of signiﬁcant objections at home and abroad. Ferenc Szaniszló who hosts his own program on the right−leaning Echo TV is widely known for propagating various conspiracy theories about negative developments in Hungary, often asserting that Israel and its “friends” are to blame. Given his history, European Union officials and the U.S. Embassy expressed their objections to such a professional histo− ry being recognized at the highest state level. Balog said in a letter that he was unaware of Szaniszló’s recent activities and only decided on presenting the award to recognize his earlier activi− ties as a foreign correspondent. Given there is no legal way to force someone to part with a presented award, he can only ask for Szaniszló to return it volun− tarily, Balog wrote.

DOMESTIC ENERGY LAWS FIT EU RULES

Hungary’s parliament has approved legislation bringing regulations on strategic reserves of gas, crude and crude products in line with a European Union directive. Hungary’s strategic re− serves will remain centrally controlled. Under the directive, member states must keep reserves level with average imports over a 90−day period or level with domestic consumption over a 61− day period, whichever amount is larger. AUDITS OF ONLINE SALES UP

Hungary’s tax authority NAV has stepped up audits of companies and private individuals that do business online. NAV conducted more than 500 audits of parties doing business online last year, more than two and half times the number in the previous year, daily Magyar Nemzet wrote. NAV found the parties owed some HUF 200 mln in back taxes in the audits. It levied ﬁnes of HUF 15 mln as a result. Online pur− chases by consumers in Hungary came to HUF 155 bln in 2011, according to a survey by GKIeNET and T−Mobile. FARMERS URGE MORE IRRIGATION

Hungary could raise its grain harvest to an annual 20 million tons from 15−16 million at present if farmers would irri− gate more, István Jakab, head of farm association MAGOSz, said. Only about 100,000 hectares of farmland in Hun− gary are irrigated at present. Hungary has a total of about 5.3 million hectares of agricultural land, compared to 6.5 million hectares in 1990 according to the KSH . This number should rise by 30,000−50,000 hectares a year, said Já− nos Nagy of Debrecen University’s Agri− culture and Farm Sciences Center.

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News 05

Budapest Business Journal | March 22 – April 04

COMPANY NEWS

MAGYAR TELEKOM will pay HUF 7.2 bln in tax on utilities

lines this year and book the entire cost in the first quarter, the company said. Telcos, as well as waterworks, electric companies and other utilities providers, must pay the state a fixed amount on every meter of their network from 2013.

The assembly of state−owned energy group MVM Zrt has approved the purchase of the natural gas business of German peer E.ON, political daily Magyar Nemzet reported. The exact value of the deal is unknown, but the government has committed to guaranteeing up to 80% of the privately agreed purchase price and earmarked €875 million for the pur− pose in this year’s budget.

Hungarian oil and gas company MOL has signed farm−out agreements with the Mari Petroleum Company to acquire a 30% stake in the Ghauri block in Pakistan and a 25% stake in block 43B in Oman, MOL an− nounced. Mari Petroleum and Pakistan Petroleum Limited each own a 35% stake in the Ghauri exploration block, where new 30% owner MOL and these companies plan to drill the first exploration well in search of expected oil and gas later this year. Hungarian automotive industry company Rába has launched a program to involve local SMEs in its cooperation with Volvo Bus Corporation. Rába expects local companies to supply 30% of the content for its joint project with Volvo Bus. The cooperation could generate annual revenue of HUF 15 − 20 billion and create about 300 stable workplaces at Rába and its suppliers. Hungarian construction company KÉSz has won a tender to rebuild the square in front of parliament with a bid of almost HUF 14 billion, business daily Napi Gazdaság said, without citing any sources. The other bidders in the closed tender were the consortia Magyar Építő− Reneszánsz and Penta−Swietelsky. The reconstruction must be com− pleted by March of next year. Hungarian building materials company Masterplast is spending €600,000 to establish an adhesives plant in Stryi, Ukraine. The plant, with an annual capacity of 20,000 tons, will start production in July 2013. Masterplast said a €1.4 million polystyrene foam insulation plant it is also setting up in Stryi will start production in June 2013. The Austrian Post will invest no further in Hungary for the time be− ing, CEO Georg Polzl recently said, Austrian daily Die Presse reported. Presenting Austrian Post’s annual report, Polzl said the state−owned Hungarian postal company Magyar Posta “clearly has the advantage” under the law on market deregulation. Investors will soon sign a contract with one of Hungary’s biggest con− struction companies on building a casino in Bezenye, near Hungary’s border with Austria and Slovakia, regional daily Kisalföld said without revealing the name of the company. Plans to build the casino – earlier reported to cost as much as €300 million – have been delayed for years.

Photo: Imre Földi/MTI

SHELL TO CLOSE 15 PETROL STATIONS IN HUNGARY Oil and gas company Shell will close 15 of its petrol stations in Hungary this year, after shutting 17 in 2012, because of the narrowing market and unfavorable regulatory environment, business daily Világgazdaság wrote. There were 230 Shell stations at the start of 2013. Shell’s retail fuel business in Hungary, which is market runner-up, made losses in the last three years, the paper said. It has laid off more than 1,000 people since 2008, and plans to cut opening hours at most of its petrol stations. Shell Hungary chairman Balázs Erenyi said that the crisis tax, the modified local business tax and the state monopoly on tobacco sales were among the regulatory issues that burdened the company.

Swiss rolling−stock maker Stadler has signed a €267 million contract to deliver 48 multiple units to state−owned railway company MÁV−START and regional railway GySEV. Stadler will deliver 42 of the trains to MÁV−START and six to GySEV. European Union funding will cover the entire cost of the acquisition.

ECE OPENS ÁRKÁD 2 IN BUDAPEST ECE Projektmanagement Budapest opened its expanded Árkád shopping center in the capital on March 20. Árkád 2 complements the neighboring Árkád 1 – which opened ten years ago and is undergoing a renovation to be com− pleted in September – with 20,000sqm of new retail space. Together, the units have a total retail space of 68,000sqm. The cost of the project comes to about €80 million. A loan from UniCredit Bank covers 60% of the investment cost.

Magyar Suzuki had net revenue of € 1.4 billion last year, down 11.4% from €1.581 bln in 2011, CEO of Magyar Suzuki Hisashi Takeuchi told the press. In 2011, Magyar Suzuki’s revenue grew by almost 3%, he add− ed. Dealers in contract with Suzuki sold 3,300 cars in Hungary last year, about three times more than in 2011. Hungarian flooring maker Graboplast will open its first warehouse in Russia in April, sales and marketing director Anett Németh told MTI. Graboplast is renting the 1,500sqm warehouse in a satellite community outside of Moscow. Exports to Russia generate about one−fifth of Gra− boplast’s revenue. The company also acquired warehouse space in the United States in December, Németh said. German utilities giant RWE is selling its minority stake in regional Hun− garian gas business Tigáz to Italy’s ENI, daily Népszabadság wrote, cit− ing independent sources. ENI owned 50.4% of Tigáz at the end of 2011, public records show. RWE held a combined 44.2% stake in the company. Tigáz has more than 1 million clients, the paper said. The company had a HUF 12.3 billion loss in 2011, public records show. Hungarian entertainment guide publisher Est Media’s 2012 loss swelled 46% to HUF 3.24 billion from the same period a year earlier. Net sales revenue fell 15% to HUF 1.07 billion. At operating level, Est Media’s loss narrowed 37% to HUF 280 million. But the company’s financial loss almost tripled to HUF 3.18 billion. Revenue of Herendi Porcelánmanufaktúra, one of Hungary’s oldest and best known makers of porcelain, climbed to about HUF 5 billion in 2012. Revenue from exports – which account for three−fourths of the total – rose 10%. Domestic turnover was up 13%. Herendi had pre−tax proﬁt of HUF 800 million. This year, the company expects sales to stagnate or rise slightly Only about 14% of Hungarian SMEs and microbusinesses have out− standing loans, according to a survey by BellResearch commissioned by Budapest Bank. Overdrafts account for about 46% of the credit, and charges to the Széchenyi Card, a state−supported credit card for small businesses, make up 19% of the total. The survey was based on data from 555 companies with annual net revenue under HUF 300 million.

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06 News

Budapest Business Journal | March 22 – April 04

OPINION

THE MORAL BASIS OF EUROPEAN SOLIDARITY n February 7 and 8 of this year, the European Council agreed upon the core figures and main rules of distribution for the EU’s next long-term budget. The new “Multiannual Financial Framework” – the Union’s budget for the period of 2014-2020 – should be ready by the second half of this year, including the detailed rules of implementation. The decision-making process is behind schedule, as the high ranking EU forum of the heads of state or government originally met on November 22-23, 2012 with the same agenda, but was not able to find an overall compromise then. After several rounds of talks, coordinated and guided by the permanent president of the European Council, Herman van Rompuy, an agreement could be reached between and among the 27 EU member states. The seven-year “financial framework” lends stability to the EU, but in the negotiation phase the tension is high as there is obviously much at stake. With the above agreement the Union has determined its receipts and spending until the year 2020. The political effect of the budget talks is a sharp polarization of the EU member states. At first sight, a ‘zero sum game’ is being played between the net contributors and the net recipients. Wealthy countries have a net contribution to the EU budget. For example, in the period of 2014-2020 Austria will pay 0.31 % of its GDP. At the same time, net recipients, like Hungary, earn additional external sources from the EU of around 2.5% of their GDP. Under the pressure of the economic crisis, the net payers’ main endeavor was to reduce the overall extent of the EU budget. On behalf of the UK, David Cameron declared that “spending cuts taking place across the different countries had to be replicated in the EU budget”. The German Chancellor, Angela Merkel, representing the biggest net contributing country, stipulated that the payment ceiling of the EU budget should not be more than 1% of the Union’s total Gross National Income (GNI). After several reductions, the 27 member

states agreed upon €960 billion as a ceiling for commitments for 20142020. For the first time, the EU has reduced the amount of its longterm budget in comparison with the preceding period. Hungary is again among the net beneficiaries of the EU budget. At the beginning of the negotiations her position was rather discouraging, but by the end the overall amount of her net receipts had increased. Some improvements of the general conditions of distribution helped: the EU’s share in support of the poorest regions has been increased from 75% to 85%, VAT can be included in bills to be settled by the EU and the ‘absorption limit’ has been determined at 2.6% of the GDP. The benefits for a net recipient country can be calculated by deducting its contributions to the Union’s budget from the payments received from the EU. For Hungary, in the current period of 2007-2013, the calculated outflow to the EU budget was €8.3 bln and the inflow €32.8 bln which gave a net result of €24.5 bln. For the next period of 2014-2020 it could be lower by several billions of euros, but no final data is at hand yet. The EU budget still has to be approved by the European Parliament, and Martin Schulz, the EP president, has

raised concerns about a “structural deficit” in the EU budget. Obviously, the recent budget cuts are not in harmony with the high ambitions of the citizens, member states and EU institutions concerning the “added value” expected from the EU in reaching objectives of growth and jobs. But the recent deal of the member states shows the final limits of their flexibility. The contributions of Hungary (as of any member state) to the EU budget are based on a share of the VAT, customs duties and agricultural levies collected by the country and a payment based on GDP. Hungary’s contribution could be lower, partly because its declining economy has been showing a sharp decrease of growth for more than a year. Consequently, the net balance could improve in spite of the cuts in payments from the Union’s budget. Anyway, the EU funds represent valuable additional resources offered by wealthier EU members to countries below the EU average on the moral basis of European solidarity. Prof. Péter Balázs is Director of the Center for European Enlargement Studies at the Central European University, a former Minister of Foreign Affairs of Hungary, and a former Member of the European Commission.

THE DEVIL’S ADVOCATE: WHY CYPRUS IS GOOD FOR EUROPE András Somi head of retail research, KBC Securities, Hungarian Branch Office

hile events in Cyprus do have some negative implications, both in the short- and the long-term, it’s worth looking at the bright side too. It’s hard to find any optimistic notes in the commentaries regarding the levy on Cypriot bank deposits (still to be voted on at the time of writing this article after several postponements). ‘Pandora’s box open’, ‘EU breached the very fundamentals of right of ownership’, ‘Only a communist would take such measures’ say analysts across the financial sector. While it’s hard to resist the temptation to join the choir, this time let’s look at it otherwise. Imposing a tax on Cypriot deposits seems to be an act of desperation on the Cypriot government’s part, but not from the standpoint of the EU. It shows that European leaders are confident enough in the stability of markets to pull a quick and risky trick during the weekend. The execution wasn’t flawless as, despite pressure from the ECB, the president didn’t manage to push the law through parliament before foreign exchange markets opened on Sunday and Russia entered the political battlefield. That could be the point where the whole story failed, but it’s too early to tell. Assuming that the levy would eventually make it through in some form, the German-led European Union could spare some €6 billion in bail-out money that would otherwise save a banking system that is home to hoards of money of shady origin, be it from Russian oligarchs or tax-evading European corporations. Cyprus would stand; its banking system wouldn’t collapse while the full control of EU and IMF would create an opportunity to eliminate the obscure tax haven once and for all (the bail-out also requires Cyprus to raise corporate taxes substantially). Clearly a win-win situation, though both ‘wins’ are on the EU – and especially German – side. All of that would have been unthinkable not long ago. In June, when Cyprus initially asked for help, the whole eurozone could easily have collapsed in the wake of such an ‘unorthodox’ idea, and the markets could have reminded us of the meltdown of August 2011. But this time the meltdown hasn’t happened, yet. The markets don’t seem to react heavily to something that is more likely a political game of chicken. Steady markets on bad news are good news. As always, one also has to look at the risks, especially with Russian interests to factor in to the math. We have seen too many politicians crossing lines that shouldn’t be crossed driven by a false sense of safety and misinterpreting the signs of the economy and financial markets. Cyprus might prove to be another chapter in this book, but if not, the Cypriot turmoil could also be a step to a more integrated and resilient Europe, as it shows the strength and willingness of leaders to hold the Eurozone together ‘whatever it takes’. That’s positive for the euro in the long run. Another risk, in the long run, is that the Cypriot case might open the door for other unusual measures to restore fiscal stability. Watching the story unfold, some politicians might see opportunities in this ‘unorthodoxy’ and may plan similar tricks. But let’s not forget the important lesson from Cyprus: the EU clearly stated that it’s ready to use its full power to force its will on a member state. And that works perfectly with financially exposed and economically dependent countries.

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News 07

Budapest Business Journal | March 22 – April 04

NOT AS ROSY AS IT USED TO BE Grey market players have been gaining increasing ground in the meat industry, to the detriment of transparent producers. Technological development has been lacking for years, and food safety issues have further tarnished the image of Hungary’s once world−famous pork products. ZSÓFIA VÉGH

Here we go again: one year after the National Food Chain Safety Office (NÉBIH) was set up, it needs to explain how horse meat DNA could get its way into several Hungarian beef products under its scrutiny. Hungarian meat eaters are not unfamiliar with such scandals: relabeled spoilt meat, carefully washed before being reboxed, as well as poultry with feces on it were found on the shelves of some Tesco hypermarkets in mid−March. The authori− ties spotted neither of the problems; an inde− pendent German food safety lab discov− ered the former, while the latter was revealed by anonymous Tesco whistleblowers who informed the press. While giving an account of NÉBIH’s activities at the annual press con− ference of the Hungarian Meat Industry Fed− eration (MHSz) last week, Endre Kardeván, a state secretary at the Rural Development Ministry (FVM), did not mention this. In his recap, Hungary fared well in food safety terms

thanks, in great extent, to the revamped food safety agency. Finding violations in 5.8% of 76,747 examined/inspected establishments does not sound much. Yet there were 33,000 more places that remained unchecked. In all fairness, NÉBIH is not to blame for all food safety issues. The food chain is international and even though there is a paper trail, a product’s exact origin is often hard to trace back. The common European platform, the Rapid Alert Sys− tem for Food and Feed (RASF), where countries register any food safety issues, does not give timely information as mem− ber states take their time updating it. Where NÉBIH could do more is in the way it punishes those that flout the regulations. Since it teamed up with the National Tax and Customs Authority (NAV), it claims to be more efficient, yet no single year has been exempt from a major food chain scandal. Tamás Éder, president of MHSz, favors more severe penalties. The Hungarian meat industry is so contaminated by scan− dals involving players in the grey market that successfully operating transparently is becoming extremely difficult. “Not only do they spoil the industry’s image, they also dodge taxes, thus becoming more compet− itive.” High costs, with a VAT rate of 27% topping the list, are the major causes for structural shortcomings, according to Éder. (MHSz and other food industry members have been lobbying for a VAT reduction for years. Parliament is discussing such a pro− posal from the FVM in its current session.) The industry is fragmented, most slaughter− houses have not invested in their machin− ery for years, plus they have to share a

declining hog stock – under four million in 2012 according to preliminary estimates. “In Germany, 170 registered slaughter− houses cut 50 million [animals] per year while we have 120 [slaughterhouses] for less than one tenth of that number,” Éder said. What’s more disturbing is that, by Éder’s account, the technological level of most Hungarian establishments is on a par with mediocre European norms at best. Whether it is this or a succession of alarm− ing food scandals that are more to blame for the fall in Hungary’s processed food exports is unknown. Probably both. In 2012, for the first time in several years, the country’s pig imports increased, while the volume of its pro− cessed meat exports dropped.

IN 2012... ...authorities registered 31 foodrelated diseases; ...790 people suffered from food-related conditions, and 119 were hospitalized; ...most large-scale food-related disease outbreaks were registered at mass caterers (21 cases, 589 persons affected); ...no food-related illnesses were traced to food industry or small farmers’ produce.

BUZZ IS ON FOR COUPONS The Hungarian online bonus/ coupon market generated HUF 6.5 billion in returns compared to HUF 4.5 bln at the 2011 launch, marking a 45% increase, a study from Internet research firm eNET found. GERGŐ RÁCZ

While the segment shows lucrative prospects, its novelty also led to several early participants being edged out. At the end of last year, the number of bonus/coupon market participants with general supply was 19, down from more than 30 at the beginning of 2012. Since, in terms of most of the data measured (number of offers, number of bonuses/coupons sold, revenues etc.), it is clearly visible that the performance of the top three sites is outstanding compared to the rest – with a 70%

TURNOVER OF TOP3 IN 2012 (HUF)

2.2 bln

source:eNET

1.9 bln

426 mln

BÓNUSZ BRIGÁD

KUPON VILÁG

NAPI TIPP

market share in total – that consolidation is expected to continue. The top three remained unchanged in their respective share of the market. The top sellers had monthly sales values of several hundred million forints each. In 2012, Bónusz Brigád achieved the highest turnover selling bonuses to a value of more than HUF 2.2 bln, second was Kupon Világ with coupons sold to a value of almost HUF 1.9 bln, and Napi Tipp again qualified third with its HUF 426 million yearly revenue.

Last year, companies monitored by eNET sold some one million coupons worth a combined HUF 6.5 bln, which offered users an average 55% discount. At full prices, the value of the purchases would have come to HUF 14.4 bln, amounting to HUF 7.9 bln in customer savings. The three top players of the segment control not only most of the revenues but also the offers included in the bonus/coupon program, with 6,500 bargains out of the approximately 12,000. While preferences are changing slightly, the biggest demand still remains for various services that can be accessed at discount prices thanks to the coupons. Travel is by far the most popular category, accounting for 38%, with beauty services coming in at a distant 18% in second. For the future, eNet predicts that the strong players, those that have been able to overcome the competition in the formative first few years of the industry, will retain and even strengthen their roles as their names become better known to customers and they also become more trusted.

NEW CAR SALES ARE OFF THE GROUND Hungarian new car sales grew by 18% last year, but car dealers are still far from happy. The Hungarian market is very far from a balanced, stable and growing trajectory, according to a new survey by PwC Hungary. KRISZTIÁN KUMMER

Hungarian new car sales increased 18% from 45,106 to 53,059 in 2012 yr/yr, topping the European chart. Car dealers, however, are far from satisfied with the statistics: the significant growth is only the result of an extremely low base in 2011. Moreover, a new issue appeared on the market in 2012, so−called “re−exporting”. To take advantage of currency exchange rates and the different pricing policies of manufacturers, cars are registered first in Hungary by dealers, then immediately re−exported to another country. Hungarian dealers estimated the number of re−exported vehicles at 7,600 in 2012 or 15% of the whole turnover of the market. Based on the 2012 new car sales data, the continuously aging Hungarian car fleet would need 56 years to be totally replaced. On the other hand, to achieve a well−balanced replacement rotation of 20−25 years, new car sales would need to be improved to a level of 120−150,000 vehicles per year, dealers pointed out. (“Replacement time” is 24 years in Slovakia, 22 in Slovenia and only seven in Luxemburg.) Hungarians spent HUF 672 billion on the early repayment of foreign currency denominated mortgages, enough to buy 130− 150,000 new cars. This drastic decrease in the population’s savings will choke new car sales in short−term, dealers argue. The reduction in registration tax hasn’t significantly affected prices (−3%), but did boost the import of used cars by 71%. On the other hand, the transaction tax, introduced in 2013, has the potential to cause huge additional costs – HUF 2.8 million on average. The black economy still operates on a very large− scale, causing damage to 93% of respondents, the survey said.

BBJ

2Business insight

Q&A with MetLife EMEA president Michel Khalaf

In pursuit of green dreams

STATE MOVES TO CLAMP DOWN ON ENERGY SECTOR PROFITS GERGŐ RÁCZ

STORY HIGHLIGHTS ■

Energy ﬁrms win court challenge against government price-cut drive ■ Prime Minister vows to implement further measures to eat into providers’ proﬁt

A matter that was only raised as a potential idea in an offhand remark by the premier last year has became one of the core issues on the government’s agenda. Since then the pursuit of a tan− gible reduction in household utility expenses has become law, as it is seen as one of the biggest everyday hard− ships for the Hungarian population, besides the other ubiquitous troubles weighing on the economy. Unsurprisingly, the governing Fidesz party’s two−thirds parliamentary major− ity ensured the related legislation was easily passed. Equally unsurprisingly, energy firms that were already com− plaining about the adversities they have to endure in Hungary have attacked the Hungarian Energy Office’s measure stip− ulating the mandatory cut, and won the first instance court case. Prime Minister Viktor Orbán delivered a heated speech in parliament where he came down hard on the energy firms try− ing to “dodge” their social responsibil− ity to take on a bigger share of the com− munity’s burdens and also expressed his “outrage” at the court that sustained their complaints. Natural gas companies attacked the central decision that would mandate the 10% reduction, with a similar lawsuit filed by electricity firms also in progress.

In spite of strong objections, the government remains committed to its recently launched campaign to cut household utility costs at the expense of the providers. Even after the affected firms’ challenge was approved by a domestic court, the cabinet’s determination is unwavering.

“The decision is scandalous, it is scan− dal itself,” Orbán told parliament, lash− ing out at the court and claiming that it sided with foreign business interests over the Hungarian people. He pledged that the government will not be deterred to reduce the energy sector’s profits to reduce household costs and declared that after the court ruling, providers can expect even further measures to eat into their profits to an even bigger extent. CUTTING DEEPER True to its word, the government didn’t hesitate to overhaul the operation of the energy sector’s regulatory environment. Following Orbán’s announcement on Monday, a special session of parliament was summoned on Thursday of the same week, and the Hungarian Energy Office was converted into a regulatory body that now has decree−making jurisdiction. Following the restructuring of the energy watchdog’s scope, affected com− panies now only have the Constitutional Court as a domestic legal forum to chal− lenge the new arrangements. The government maintains that after more than a decade of plenty, when for− eign interests managed to acquire valu− able Hungarian businesses in the age of privatization in the 1990s, it is only fair that they should pay up now. It also main− tains that foreign−owned energy compa− nies collected the biggest share of inflated profits between 2002 and 2010, when the socialist MSzP was in government. “The reduction of household over− heads costs has to be realized from the providers’ profits,” Fidesz caucus leader Antal Rogán said at a press conference

BRIGHT NIGHTS IN BUDAPEST MAY TURN DARK WITHOUT MAINTENANCE AND DEVELOPMENT FINANCED FROM PROFITS

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2 Business

Budapest Business Journal | March 22 – April 04

Changes in investment volumes into the energy industry (%)

Source: KSH

Investment volumes into the energy industry (HUF bln)

after the rearrangement of MEH’s struc− ture and jurisdiction. As he explained, electricity firms claimed after tax profits of HUF 771 bil− lion, while gas companies collected HUF 267 billion in clean profits between 1995 and 2011. “It is thus plain to see that there is indeed a profit that could allow the realization of the cost−cutting effort,” he said. He didn’t discuss the effects of currency fluctuation or the volume of investments the affected companies had carried out during the time. PROFIT? WHAT PROFIT? The “extra−profit” that is a key element in the government’s rhetoric against the

energy sector is something that has been debated by the industry. In February the Elmű−Émász company group – majority− owned by Germany’s RWE – distributed a letter to consumers informing them about the possible consequences of the cost− cutting campaign and the composition of the prices that the clients pay. According to the group, the expenses shouldered by households are in the larg− est part paid to the state rather than the providers. The letter says that one third of end user tariffs come from taxes, while another third goes to the state−held energy company MVM Zrt. At the end, Elmű−Émász said it only collects HUF 1.32 for every kilowatt−hour of electricity

it provides, making the household branch of its business a loss−making division, despite the government rhetoric about excessive profiteering. It noted that the government’s steps have led to scheduled developments being scrapped from the agenda. Shortly after the government’s inten− tions were reveled, left−leaning politi− cal daily Népszabadság reported that RWE would be parting with its interest in gas provider Tigáz, which has produced losses over the past few years amount− ing to billions of forints. Compatriot energy group E.ON has already reached an agreement to sell its likewise troubled Hungarian gas business to the state.

While the energy firms are reluctant to discuss their immediate course of action, the fact that the operating environment in Hungary – a sectoral tax was also lev− ied against the industry – has already had a measurable effect on the volume of investments. In 2012, energy sector investments slumped 39.6% on the year, following an 8.1% year−on−year contrac− tion in 2011.

COURT ACTION Magyar Gázszolgáltató Kft, E.ON Földgáz Storage Zrt, E.ON Dél-dunántúli Gázhálózati Zrt, E.ON Közép-dunántúli Gázhálózati Zrt, Égáz-Dégáz Földgázelosztó Kft and FŐGÁZ Földgázelosztási Kft filed the case against the Hungarian Energy Office, the Budapest Business Journal learned from court spokesman Péter Póta. The court found that the procedural objections raised by the plaintiffs were justified based on the brief period of time – a single day- available to the affected companies to evaluate and properly comply with the changes that rose in the legislative environment. Póta noted that six electricity companies (Émász Hálózati Kft, Elmű Hálózati Kft, EDF Démász Hálózati Elosztó Kft, E.ON Észak-dunántúli Áramhálózati Zrt, E.ON Tiszántúli Áramhálózati Zrt, and E.ON Dél-dunántúli Áramhálózati Zrt) filed a similar complaint, where the ruling was postponed after a hearing on March 18. The BBJ contacted the firms but either received no response or a refusal to comment, given the delicacy of the situation.

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2 Business

Budapest Business Journal | March 22 – April 04

Q&A

METLIFE AIMS FOR GROWTH IN EMERGING MARKETS Having completed a major acquisition and integration in Hungary, U.S.−based insurance major MetLife is aiming to boost its emerging market businesses where it sees ample room for growth. The Budapest Business Journal spoke to president of MetLife’s EMEA region Michel Khalaf about how the company plans to move ahead with its efforts, what its plans are for Hungary and how Snoopy fits into all this.

A: Of course, the Hungarian market actually shrank in the past year, but we have a long−term approach. When we look at Hungary, we see that insurance penetration is relatively low. We realize that countries in Central Europe have been affected by global and eurozone economic events. This accounts for the slowdown, but our expectations are that as these economies pick up the insurance industry will also benefit and show a healthy rate of growth. We would like to be at the forefront of that.

What kind of saturation are you aiming for in Hungary? A: I think we have a long way to go since the base is low, only about 1% penetration. The potential is very big here. Obviously, a healthy growing economy helps and if that comes in the future, then the industry can, of course, grow. Any optimism I may have naturally doesn’t involve a rapid recovery that happens overnight, because Hungary certainly isn’t immune to global events. But if you look at the long−term prospects, given that the political environment is stable, the region as a whole and Hungary in particular will emerge from this.

GERGŐ RÁCZ

What brings you to Hungary? A: I’ve been meaning to visit here for a while and finally I have had the chance to do so. We have held a convention when for the first time our agents from both companies – ex−Alico and ex−Aviva – met under one MetLife roof. Of course, our acquisition of Aviva in Hungary was important for us and I am proud to say that the integration has gone extremely well. We have a very talented group of people and the combined talents from the two companies complement each other perfectly. This combination creates the foundation for us for future growth, so we are very pleased with how the process turned out.

What convinced you to go ahead with this acquisition in the first place? A: Central Europe is a vital part of our strategy of focusing on emerging markets that have big potential for us in terms of growth. There is significant room for expansion in these markets and the acquisition presented a huge opportunity for us that fits well with our strategy.

What is your reasoning behind such an acquisition in Hungary where the market isn’t exactly lucrative right now, considering the state of the economy?

You mentioned that the market shrunk last year. Can you put some numbers on that? A: Yes, there was a contraction of 6.8% (10% single premium and regular premium) in the market. This is I think the consequence of the economic climate, which makes the situation challenging. I think the main issue for the industry is the uncertainty that is created by the current economic climate, which leads to decisions being delayed or deferred.

What is your impression of the current regulatory environment for your industry? A: We believe that a stable political and regulatory environment is helpful to the industry as well as in terms of investments when capital is scarce. We believe that an environment that encourages the inflow of capital rather than restricts it is very important to any economy.

Are you involved in any interaction with the government? What is your opinion of the current taxes and regulatory approach that affects your business in Hungary? A: MetLife is a member of the Hungarian Insurers’ Association. In that respect, we can convey our opinions and we conduct our business in line with the local conditions. Last year, we paid HUF 852 million in the finance sector tax to the state. We hold on−going discussions with the regulators

MICHEL KHALAF Besides being the president of MetLife’s Europe, Middle East and Africa businesses, he is also a member of the company’s executive group. He was appointed to his current position in November 2011, having earlier supervised various regions within MetLife’s global portfolio, and previously worked at AIG. Khalaf is a graduate of Syracuse University with a B.S. in engineering and an M.B.A. in finance. He is a fellow of the Life Management Institute. aiming to help create an environment that encourages the industry to grow.

What is your opinion about the government changing its earlier declared position and making the tax permanent? A: I wouldn’t like to comment on that. I can repeat that we are hopeful and confident that our Hungarian approach will fit in well with our new global strategy.

Which is where Snoopy comes in? A: Snoopy is our brand ambassador. There is a perception that insurance companies in general are not necessarily the most accessible companies to do business with. For us, it is very important to be known and seen as a company where this isn’t the case. We have ground to make up to present ourselves as a more accessible and more approachable company to our clients, and we believe Snoopy can help in achieving that. Most markets where this campaign has been introduced produced positive responses.

How will the integrated company work? Do you plan on selling policies in branches, letting the clients come to you, or will you keep to a more traditional ‘insurance salesman’ approach?

A: We will continue with the face−to−face model. We have a strong agency, especially now after the integration. We also have partnerships with independent partners that we aim to build on as well as exploring new channels in the region to fuel growth.

Are you looking into other acquisitions in the region? Are any new targets being eyed in Hungary? A: In Hungary we have just concluded a major integration. We are not pursuing anything in particular, but certainly we will look at our options as they come. We are open to more acquisitions in the region if they make sense in terms of our strategy.

What is the main thrust of MetLife’s global strategy now? A: The main focus is to enhance our presence in emerging markets since the U.S. and Japan, which are our biggest markets, are also highly saturated, with limited room for potential growth. This growth that the emerging markets have to offer can be achieved both organically as well through acquisitions. Our main effort is to make MetLife globally recognized as the leading provider of life insurance. Here in Central Europe, we see major potential for growth for this industry and we want to be a very big part of that.

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2 Business

Budapest Business Journal | March 22 – April 04

ENERGY

EXPERT OPINION

ZOMBIE: IN PURSUIT OF THE THE EU EMISSIONS GREEN DREAMS TRADING SYSTEM

GERGŐ RÁCZ

The European Commission’s climate and energy package lays out ambitious tar− gets for the EU. The cornerstone goals of the initiative involve the 20% reduction of greenhouse gases from the levels mea− sured in 1990, raising the share of renew− able resources in the EU’s energy mix to 20%, and a 20% improvement in energy effi− ciency by 2020, hence the title 20−20−20. The plan lays out raising its emission reduction target to 30% by the same dead− line if other economies in developed and developing countries make similar pledges. Implementation in Hungary took off

country’s own reform initiatives, the share of renewables must cover 14.65% of gross energy consumption.Though there is still time, there is also plenty still needed in terms of new developments.

REBUILDING GREENER To say there has been a tumult of new energy plant openings would be an exag− geration. This phenomenon is largely in line with the waning level of investments in general. While in 2012 investments over− all plunged by 5.2% on the year according to the latest figures from the Central Statis− tics Office (KSH), the energy sector saw a resounding 38.6% year−on−year drop. Significant upgrades to the existing energy production infrastructure is made all the harder and more unlikely in the near future considering the conditions. The sectoral taxes levied on energy firms, the latest mandatory reduction to house− hold consumer energy prices, not to men− tion declared government goals of further reductions later this year, all lead to costs that the companies will have to shoulder, basically ruling out new developments.

István Zsoldos CHIEF ECONOMIST, MOL GROUP

Péter Simon Vargha CHIEF ECONOMIST FOR HUNGARY, MOL

here should we begin? The article above hints at a large number of topics, each of which is complicated. Let’s narrow the focus on the implicit assumption that the current EU environmental policies are a “good thing” as they stand. We think they are inefficient, self-contradicting and are mixing up ends and means. And the system is falling apart. It is like a zombie, far from well and alive, but not quite dead, and acting in an unpredictable way.

(the other “20-20” targets). These also bring massive emissions reductions, but usually at way higher cost, at least for now. This makes the policies inefficient. Moreover, as these latter measures are outside of the emissions trading regime, any reduction there reduces the need to do it through CO2 prices, and results in a CO2 price decline. So the policy goals contradict each other. A much better way would be to incentivize research and development in renewables, which could bring the costs of these technologies down. In general it would be better to wait with mass-scale implementation of renewables until costs can be lowered. The clearest sign of something amiss is the collapse of the CO2 price, which dropped to about 4 euros per ton. This is way too low to incentivize anyone to reduce

FORKING OU THE GREEN The ministry too expressed confidence that the available funding both from the Euro−

Source: Bloomberg

strongly, but the effort seems to have slowed; the share of renewables is still min− ute and there is a need to implement fur− ther measures to improve efficiency, even though the country is also committed to the more ambitious target. According to the National Development Ministry Hungary’s commitments are laid out in the national energy strategy that par− liament approved in the fall of 2011. “The primary goal in terms of renew− able energy sources is to achieve a share of 30% along with a 23% improvement of energy efficiency by 2030,” the min− istry’s press department said. Based on the government’s commitments made to the European Commission as well as the

pean Union and from domestic resources will be sufficient to keep the effort on track. In 2011, the government earmarked HUF 33 billion for frameworks supporting renewable energy sources, with another combined HUF 94 billion available in the first half of 2013 for various related investments. In the past two years, HUF 24 billion in subsidies has been awarded under tenders, it added. “Hungary... obliged itself to reduce pri− mary energy consumption by 10% and to make certain the increase of greenhouse gas emissions cannot exceed 5% of the ref− erence 2005 values until 2020. Based on the preliminary statistical data, the goals set for 2020 are attainable,” it said.

How is the ETS – the main element in the first “20” in the “20-20-20” goals – supposed to work and what is wrong with it? The ETS is a cap-and-trade system for energy-intensive industry sectors in the EU (which now covers around half of energyrelated emissions). The policymakers limit how much CO2 emissions they allow, and somehow distribute among market participants the quotas that represent the allowed CO2 emissions (this could be through either auctions or free allocation). Then, the market players buy and sell the quotas among themselves, until those who value them most (for whom emitting CO2 is worth the most) acquire them, leading to an efficient result and a market price of CO2. The problem with the system is that politicians were skeptical about it from the start. Markets sound good and do the job, but politicians do not really trust them to deliver the exact tangible results they would like. The market may solve the problem by, say, switching from burning coal to gas in existing plants, but there is little opportunity for a politician to claim credit for that and to appear in the evening news opening new facilities. So they also introduced some other targets, for renewables and energy efficiency

CO2 emissions; it is no longer a price indicator, but a political barometer. The other “20-20” targets and the recession took care of the emission reduction. There are far more emission allowances in the market than industry ‘demand’ to emit CO2, so CO2 prices in theory should be zero. The reason why the price is not zero is that investors are expecting (and pricing in) some politically motivated action that would reduce supply or increase demand for quotas. The credibility of the system is already shaky. That is a serious problem because high uncertainty curbs investments into emission-reduction measures, too. We think the EU should move towards a carbon tax system, and forget about all the planned economy nonsense of separate renewable targets and energy and car efficiency, as well as lots of other targets and regulations. That is unlikely to happen. Or the EU could come clean and admit that it does not believe in (or does not have the required political cohesion to operate) a price-based mechanism to reduce CO2, and give up the current quota system altogether. As the system stands now, this is just another layer of uncertainty for investors. And it is not at all clear whether in such a muddled system, falling behind in implementation is actually a “bad thing”.

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Hungary prides itself in its European Union presidency of 2011 being one of the key drivers of the bloc’s so called 20−20−20 environmental initiative. The country still has plenty to do and the momentum of the early years seems to be stagnating, despite the government’s confidence.

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2 Business

Budapest Business Journal | March 22 – April 04

CEOs SEE SHINIER FU T In spite of the generally negative sentiment, Hungarian CEOs are re rather confident about their companies’ prospects for revenue growth for the next 12 months, but only 5% expect the Hungarian n economy to grow, the second Hungarian CEO Survey, conducted d by PwC Hungary, reveals. CEOs are even more optimistic about revenue growth in the longer term, and the responses given by CEOs polled for the global survey paint a similar picture.

GLOOMY ECONOMIC PROSPECTS CEOs are more confident about their company’s prospects over the next 12 months or three years than about economic growth in their own country or globally. This suggests that CEOs, both in Hungary and worldwide, continue to believe in the suitability of their strategic objectives. The survey also shows that although global CEOs this year are less optimistic about economic prospects than last year, they are generally more confident about the future than their Hungarian counterparts.

GROWTH POTENTIALS

The survey reveals that Hungarian CEOs, like their global counterparts, see the potential for growth primarily in developing new products, and in expanding in their existing domestic markets. Mergers and acquisitions, not surprisingly, have been on the decline, both in Hungary and globally.

QUESTION:

Of the following potential growth opportunities, which one do you think will be the most important for your company in the next 12 months?

QUESTION:

Do you believe the Hungarian economy will improve, stay the same, or decline over the next 12 months QUESTION:

Do you believe the global economy will improve, stay the same, or decline over the next 12 months?

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2 Business

Budapest Business Journal | March 22 – April 04

U TURE FOR COMPANY THREATS TO GROWTH

QUESTION:

Executives have also been asked about the factors they felt the most threatening to their companies’ growth prospects. In Hungary CEOs think that the growth prospects of their businesses are most threatened, among the various economic and political factors, by central government measures aimed at addressing the public deficit and the debt burden. On a global scale, however, executes are most afraid of uncertain or unpredictable economic growth; government measures come only second.

How concerned are you, if at all, about the following potential economic and policy threats to your growth prospects?

CUSTOMERS FIRST?

However, in order to exploit growth potential, Hungarian CEOs have to consider several important factors, mainly improving relations with the two groups of stakeholders that have the biggest impact on businesses: regulators and customers. At a global level, customers rank first when it comes to the stakeholders’ group having the most influence on businesses.

QUESTION:

Do the following stakeholders have any influence on your business?

RESTRUCTURE, REVIVE

Today, executives have to find appropriate responses if they are to operate successfully, and implement the necessary measures at their companies. Compared to the mid−2000s, this requires a new kind of leadership, new priorities, and differently structured companies – and this may pose the biggest challenge to CEOs today. The survey shows that steps taken towards cost−effectiveness are still the most important factors in improving competitiveness – both in Hungary and worldwide.

QUESTION:

Which of the following restructuring activities are you planning to start in the next 12 months?

Based on PwC Hungary’s 2nd Hungary CEO Survey

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2 Business

Budapest Business Journal | March 22 – April 04

FUNKY BUSINESS

BITE BAKERY: THE OWNER MUST BE PRESENT Although Hungarian retail sales have dropped like a rock recently, a new café has popped up distributing and marketing Hungarian style bakery products. KRISZTIÁN KUMMER

The first Bite Bakery Cafe opened its doors on February 13 just across the road from the Nyugati railway station. Owner Crown Foods, a subsidiary of catering and hospital− ity machinery manufacturer Thermotech− nika, aims to establish a new type of fast food chain with its fresh made rolls and pretzels. The new shop functions fully as a bak− ery as well, with mixing and baking all carried out on site. The café uses Thermo− technika’s machinery and, as such, also operates as a showroom for the machine manufacturer’s products. “The business model is very simple: something fast and simple, like pretzels and

rolls, that reflect on the childhood memo− ries of most Hungarians. The taste also reflects Hungarian cuisine, but with a twist. The well known forms of pretzels and rolls are flavored sometimes with bacon, garlic, salami or mascarpone,” said András Pólus, managing director of Crown Foods, point− ing out that hundreds of test products were baked to finalize the recipes. Over the initial investments, Crown Foods has raised capital by HUF 13 mil− lion, supplemented by a two−stage invest− ment of HUF 49 million from the state− owned Széchenyi Capital Investment Fund, which will purchase a 42.86% stake in the company. According to the plans, the com− pany will pay back the investment with yields until the end of the fifth year. The total investment of HUF 65 million is enough to open two to three restaurants (the development of the interior design at the Nyugati café cost HUF 8 million alone), but the expansion won’t stop at that point according to the managing director’s vision. “It’s no secret that we want to establish a franchise chain one day and there are already requests, but it’s too early to talk

about these plans. We have to build up the supplier network, establish the precise manufacturing methods, etc. We will start our next café this month and would like to open eight shops altogether in five years on our own. Then we could talk about fur− ther prospects of expansion through fran− chising,” Pólus said. In recent decades quite a number of Hungarian fast food chains like City Grill, Paprika or the infamous Gusto Burger (a fast food chain of just one), have been forced to quit the market and have given place to throngs of Turkish and Chinese restaurants. But Pólus isn’t afraid of an unwanted early enclosure. “The first craze about the new place is over and our sales are still pretty strong,” the director said. He believes that success in this business stands on three pillars: “An original and unique flavor, suitable prices and personal commitment are key factors to success,” he says. “As a manager and an owner, I have to be in the café, to learn, fix and improve. A huge multinational fast food chain can’t satisfy the changes in customers’ taste from one day to another. We can.”

PARK INN BY RADISSON BUDAPEST HAS OPENED

BUDAPEST’S NEWEST BUSINESS HOTEL

ecember 2012 – Park Inn by Radisson Budapest, a member of the Carlson Rezidor Hotel Group, opened the first hotel in Hungary to offer a socalled self check-in facility. The self check-in is basically an automated pod for checking in and out without standing in line and is really fast. This is not the only reason why you should visit and stay at our hotel. Let’s take a quick look around: after you’ve parked your car in the hotel’s 90-space garage and just before heading for your spacious room, grab some snacks, chips, alcoholic or non-alcoholic beverages or fresh salad from the fridge of the novelty ‘Grab and Go’ kiosk next to the reception, replacing minibars in the rooms. Isn’t it great to have a little something to bite on while staying in any one of our 110 standard rooms, 20 superior rooms or eight junior suites? The rooms are characterized by sophisticated interior design and comfort in addition to state-ofthe-art technology, including flat screen TV with international satellite channels, free Wi-Fi access and the notebook-sized safe deposit box. Be sure to visit the roomy and well-lit Map restaurant and Street bar of the hotel designed according to the latest trends. Here you can enjoy

the freshly prepared and rich international and Hungarian-style buffet breakfast, lunch and dinner, which you can work off in the hotel’s gym. With a total floor space of 360 square meters and a ceiling height of six meters, the ballroom would even be fit to serve as a car showroom. Also, there is no need to worry about excessive neon light exposure, as the skylights supply the room with natural light and fresh air. The combined capacity of the hotel’s six conference rooms (600 seats) makes them an ideal venue for practically any type of event; a professional conference organizing team awaits your request. Park Inn by Radisson Budapest is located in the business district just four kilometers from

the city center and 22 kilometers from Ferenc Liszt International Airport. The inner city is just a short, 10-minute subway ride from the hotel, which is situated only a short walk from the Gyöngyösi utca subway stop of the blue M3 line. For shopping and fun, Duna Plaza shopping mall is just around the corner. Whether you are here on business or vacation, Park Inn by Radisson Budapest, which combines the best of both conventional and modern hotels, is the right choice for you. The friendly staff, international background, competitive rates, reliable and professional service will guarantee your stay in Budapest is an unforgettable experience.

H-1138 Budapest, Szekszárdi utca 16–18. T: +36 1 688 4900, F: +36 1 688 4901 info.budapest@rezidorparkinn.com www.parkinn.com/hotel-budapest www.rezidorparkinn.com

NOTE: ALL ARTICLES MARKED PARTNER CONTENTS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

PARTNER CONTENT

BBJ

3Special Report Q&A

PREMIUM BANKING: Cream of the crop CORPORATE FINANCE: Venture capital

leads the way

BATARA SIANTURI

BANKING &

FINANCE

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Budapest Business Journal | March 22 – April 04

NO TURNAROUND IS EXPECTED IN LENDING ACTIVITY IN 2013 About €14 billion has already left the Hungarian banking system, an amount equivalent to the total assets of 1.5−2 large banks. GABRIELLA LOVAS

According to a lending survey by the National Bank of Hungary (MNB) pub− lished in January, corporate clients seek only short−term loans, and there is an almost complete lack of demand for investment loans. Factoring, as an alternative source of short−term financ− ing for companies, is highly popular. Most banks are willing to finance only highly creditworthy clients. As a result, they accept lower interest rate spreads in their competition for good clients. “Beside stricter risk management and slower decision making, the biggest problem in bank financing is the short− ening of maturities, as it weakens the financial stability of businesses” KPMG senior partner Csaba László told the Budapest Business Journal. Demand for household loans remains subdued, mainly due to earlier excessive indebtedness, according to the MNB survey. Credit conditions eased during last year, and have practically returned to the end−2011 level. Banks expect the state interest rate subsidy scheme to result in an upswing in the housing loan market. By January, most of the bigger banks had started to offer this scheme. Nevertheless, banks do not expect any dynamic growth in new lending in 2013. NO SIGNIFICANT DETERIORATION IN ASSET QUALITY “I do not foresee a significant deterio− ration of the corporate loan portfolio, as there are not too many skeletons left in the cupboards,” László stressed. The general business environment now deter− mines assets quality. Given the lack of economic growth, he sees slight chance that the corporate portfolio will further deteriorate. In contrast, the retail portfo− lio could easily cause more surprises. Lenders surveyed by the MNB said that the corporate loan portfolio consisting of loans extended after 2009 is performing excellently. Defaults are more common in the case of loans given prior to the crisis. The sector continues to digest pre−crisis commercial property loans. MORE DE-LEVERAGING TO COME Although no banks have exited Hungary so far, about €14 billion has left the coun− try’s banking system, while only €2.5 bln

I DO NOT FORESEE A SIGNIFICANT DETERIORATION OF THE CORPORATE LOAN PORTFOLIO, AS THERE ARE NOT TOO MANY SKELETONS LEFT IN THE CUPBOARDS

has been injected. László pointed out that the amount that has left the country is equivalent to the total assets of 1.5−2 large banks. As soon as parent banks realized that the measures of the Hungarian gov− ernment are not at all extraordinary, they decided to make their Hungarian units self− financing by reducing their loan−to−deposit (LTD) ratios from the earlier 170% to 100%. He believes that de−leveraging will last for another 18 months. This, in turn, will have a dramatic impact on Hungary’s growth pros− pects. László noted that achieving a 100% LTD ratio would make a potential sale easier for the owner of the subsidiary. “As much as bank leaders hated the extraor− dinary bank levy, they hate the financial transaction tax even more, because the sys− tem changeover was a nuisance needing lot of time and energy,” said László. However, once it is implemented, it will not require too much effort as long as the rates remain unchanged. László does not expect businesses to take their financial transactions abroad due to the

KPMG senior partner Csaba László

LOOKS LIKE IT MAY BE A WHILE BEFORE BANKS OPEN THEIR VAULTS WIDE AGAIN

HUF 6,000 cap on the FTT. Exceptions might include companies with lots of smaller trans− actions vis−à−vis foreign clients in the value range of HUF 50,000−100,000, but these are rare. On the other hand, businesses will inevi− tably rationalize their finances in order to cut banking costs.

MOUNTING LOSSES Hungarian banks reported a combined after−tax loss of HUF 160.6 bln in 2012, according to the preliminary figures of financial watchdog PSzÁF. This compares to an audited loss of HUF 243.3 bln in the previous year, which was mainly attribut−

able to the effects of the early repayment scheme. Net interest income dropped almost 9% to HUF 775.7 bln. Provisions for loan losses were at HUF 142.7 bln, down from HUF 681.9 bln in 2011. Oper− ating losses dropped from HUF 149.9 bln to HUF 50.5 bln last year.

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Budapest Business Journal | March 22 – April 04

ABSOLUTE RETURN FUNDS: STILL PLENTY OF ROOM FOR GROWTH DESPITE DECREASING RETURNS Fund managers try to attract more risk−averse investors with new construction GABRIELLA LOVAS

Demand for absolute−return funds has significantly exceeded demand for other fund types in Hungary during the past three years, as their objective is to reach positive returns in all market conditions. These funds use investment manage− ment techniques that differ from tradi− tional mutual funds such as short selling, futures, options, derivatives, arbitrage, leverage and unconventional assets. Abso− lute−return funds set their own targets rather than try to track a benchmark index. Director of Concorde Asset Manage− ment René Telegdi believes that there is room for further growth in the absolute return sector. Since the introduction of the absolute−return fund category in July 2011, the share of these funds has jumped from 4% to 6.5% in only 20 months. He cited the example of real estate and guar− anteed funds, which reached 15−20% mar− ket shares in their prime. Figures from the Association of Hun− garian Investment Fund and Asset Man− agement Companies (BAMOSz) show that assets in investment funds were up 3.8% to HUF 3,543 billion in January from a month earlier. Within that, assets in abso− lute return funds reached HUF 228.6 bln at the end of the month by the combination of HUF 20 bln new funds and the returns. DECREASING RETURNS Absolute−return funds, as well as other money− and capital−market funds, have all been affected by a significant decrease in the yields of short−term, low−risk, fixed rate investments in the past 18 months, says Telegdi. Absolute−return funds take extra risks only if they see value in it in an absolute sense, based on risk−adjusted return, otherwise they keep their assets in short government securities, which saw yields dropping from 7−8% to around 5%. The performance of absolute−return funds depends on the performance of the other market segments too, OTP Fund Manager marketing and sales direc− tor László Gáti told the Budapest Busi−

INVESTORS FAVOR FIXED RETURNS RATHER THAN SEE THEIR SAVINGS FLOW AWAY

ness Journal. Although the Dow Jones, for instance, climbed to a record at the beginning of March, investors’ confi− dence in equity funds has not returned in Hungary, resulting in significant capital outflows from these funds. He noted that absolute−return funds often act as substi− tutes for equity funds. NOT FOR THE FAINT-HEARTED Absolute−return is considered to be only for private and premium banking custom− ers, however there are funds available now that promise to smooth out markets’ bumpy ride to attract more risk−averse investors. Gáti believes that only the top two or three players can offer such con− structions, as only they have the neces− sary investment volume and track record. OTP offers three such fund types, explained Gáti. The OTP Premium Derivative Fund, for instance, provides lower risk and volatility through diver− sification. As its portfolio contains both derivative and absolute−return funds, investors can benefit from the perfor− mance of several absolute−return strate− gies at lower risks, as the correlation of these strategies is relatively low. The second level of protection is repre− sented by absolute−return funds wrapped in capital and return−protected funds, says Gáti. These funds are typically closed end funds with a maturity of 3.5 years. At

the end of the investment period, inves− tors will receive the invested capital plus a fixed return, which is currently about 8%. This translates into a 2−2.3% annual return. In the basket of the fourth series of the OTP Szinergia Fund, there are alto− gether 11 funds including the fund manag− er’s flagship product, the absolute−return Supra Fund with a 30% weight. Any poten− tial extra return above the guaranteed yield depends on the performance of these

funds. OTP fund manager’s latest inno− vative product is a unit−linked life insur− ance construction developed together with insurance firm Groupama Garancia. Concorde is in the middle of setting− up several euro−based products that will be launched within the next few weeks, including a euro−denominated absolute− return fund, which will be a good option for investors seeking a few percent extra return in euro terms at relatively low risk.

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Budapest Business Journal | March 22 – April 04

Q&A

CITI HUNGARY R PROFITABLE IN 2 Despite a challenging operating environment, Citi Hungary closed a profitable year in 2012, Batara Sianturi, Citi Country Officer for Hungary told the Budapest Business Journal. The bank’s audited financial report will be published later this month. GABRIELLA LOVAS

Are you satisfied with last year’s results? A: In 2012, Citi was profitable, while the Hungarian banking sector posted a combined loss of around HUF 150 billion. We are pleased that our per− formance remained well balanced across the three main business lines, namely consumer, commercial, and corporate banking. We have been able to increase our cost efficiency and manage credit risks and portfolio quality. This is espe− cially important since the banking sector in Hungary continues to be challenged by high credit losses and high loan delin− quencies. Liquidity remained strong with a good loan−to−deposit ratio while deliv− ering loan growth in 2012. We see three secular themes emerging where Citi can play a unique role. These are globalization, urbanization and dig− itization. In globalization, as the world becomes more interconnected, Citi has a big advantage in connecting clients through its global footprint in more than 100 countries. In line with rapid urban− ization trends, Citi aims to focus on the top 150 cities in the world to serve the needs of its corporate and public sector clients, retail consumers and small− and medium−sized businesses in those cit− ies. In digitization, Citi is bringing new ways of banking through innovation in client interactions and customer services. In Hungary for example, to promote elec− tronic banking and environment−friendly behavior, every time a customer switches from printed to paperless electronic

BATARA SIANTURI MSc, MBA Citi Hungary’s CEO Batara Sianturi is also the Regional Head for Hungary and the Balkan & Baltic Regions. Sianturi began his career in 1988 as a Management Associate with Citi Indonesia and later held various senior management positions in Indonesia, Australia and Hungary. He has been a member of Citi EMEA Consumer Executive Committee, Citibank Europe Plc Senior Management Committee and the AmCham Hungary Corporate Governance & Business Integrity Committee. Sianturi earned BSc and MSc degrees in Chemical Engineering and Polymer Science and holds an MBA degree in Finance from universities in the United States. statements, we plant one tree. A total of 111,000 Citi customers have responded to our call since 2008, and we have planted 111,000 trees around Budapest. We are very proud of our innova− tions, too. We opened a CitiGold Cen− ter with digital features in MOM Park last year, which is a prototype of our smart branches. These have already been launched in cities like Singapore, Hong Kong, New York and London. In retail banking, we introduced the first Master− Card PayPass Sticker linked to a credit card, while in the corporate segment we launched new innovative functionalities in our foreign exchange trading platform called CitiFX Pulse.

What are your plans for 2013? A: This year we plan to launch a new IT platform, which, taking best practices from Asia, Latin America and the United States, will give our cus−

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Budapest Business Journal | March 22 – April 04

REMAINS 2012

IN HUNGARY, EASING INFLATION AND LOW GROWTH FIGURES MAY PROVIDE ARGUMENTS TO CUT THE BASE RATE FURTHER.

tomers a new level of experience in retail banking. We will continue to enrich and promote our CitiFX Pulse, which is a very popular online trading platform for our corporate and commercial banking cli− ents. We have already introduced FX pric− ing through Bloomberg.

Do you think that Citi Hun− gary will be profitable this year, too? A: I do not want to give a forward−look− ing statement, but Citibank Hungary has been profitable throughout the crisis. This is good testimony that we can main− tain our bottom line in a downturn, too.

What has been the impact of the recent government mea− sures on Citi Hungary? A: It is very important to put this ques− tion in context. As I mentioned before, the Hungarian banking sector posted a loss in 2012. This is not good. We see that the Hungarian banking sector con− tinues to face challenges, with a weak operating environment being the first and biggest problem for top line growth. Second is the deteriorating asset qual− ity. The overall sector non−performing loan ratio grew from 11.5% in Q4 2011 to 13.7% in Q4 2012. Third are the structural funding and liquidity challenges, given the FX matu− rity mismatch of the Hungarian bank− ing system. The overall loan−to−deposit ratio dropped from a peak of 165% to around 110%, showing that deleverag− ing has gone a long way, while deposit levels have been modestly stable. Lastly, the challenge in profitability of the sec− tor will continue to demand parent sup− port for some banks. As to the financial transaction tax, it is too early to call but so far we have not seen a major behavior change from our SME and corporate clients. In retail banking, we notice a slight growth in electronic transactions, online banking and card purchases, which is encourag−

ing because it is in line with our digiti− zation efforts.

What is the potential impact of the recent change in the cen− tral bank’s management? A: It is too early to comment on that. We aim to continue to work with all the stake− holders in the banking sector. I think we will see easing inflation and the government has publicly stated its commitment to keep the budget defi− cit below 3% of GDP. Moreover, the suc− cess of the $3.25 bln bond issue has already alleviated some of this year’s funding requirements. As such, the key remaining issue for Hungary is how to promote growth.

What is your opinion about the central bank’s easing cycle, which began in August? A: If we look at the global trends, we have seen easing by the Federal Reserve in the United States and we expect the European Central Bank to cut the main refinancing rate further this year. In the UK, the MPC remains biased to loosen further through QE, given the weak economy. In Japan, the new BoJ leader− ship will likely expand asset purchases. In Hungary, easing inflation and low growth figures may provide arguments to cut the base rate further.

Citi representatives participated in a recent road show for inves− tors. What was the feedback? A: This was a non−deal road show to update the global investment commu− nity on the credit story of Hungary, and its commitment to keep the budget deficit target and to promote growth. Investors’ feedback was quite positive. The recent $3.25 bln bond offering at 3.75x oversubscription proved inves− tor confidence in Hungary. The markets are currently chasing high−yield instru− ments due to the long low interest rate environment.

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Budapest Business Journal | March 22 – April 04

PREMIUM BANKING: CREAM OF THE CROP When we pay more for an advanced service we expect special care to be taken over our needs, something extra above the usual service. That is no different in the banking sector, where premium services are offered for those who are willing to pay for it. GERGELY HERPAI

The Budapest Business Journal set out to ascertain the kind of services that top− level customers are really interested in. Talking to representatives of UniCredit, CIB and OTP banks, we found they have approximately the same experiences when it comes to the needs of their pre− mium clients. It comes as no surprise that besides the usual discounts on the basic or even advanced banking services offered, the most important area in which premium clients are interested is personal care.

Having somebody at your bank who helps take care of your usual banking needs quickly and courteously is one thing, but perhaps the most important factor for a premium client is where and how to invest his money. “Our personal investment advice and investment services are the most sought after by our premium clients. It’s also a completely free service for premium cli− ents, aside from the account maintenance fee,” Eszter Matus from the press office of CIB Bank told the BBJ. INFORMATION, PERSONALIZATION AND SWIFTNESS Premium clients also want to be informed very early on about any opportunity to increase their savings. “Our premium clients are very much interested in convenience services such as priority service, dates, booking of accom− modation and SMS messages about matur− ing savings, and about the latest discount opportunities,” said Judit Szabó from OTP’s Communications Department. OTP has a proprietary wealth plan− ning system that takes account of its cus− tomer’s life goals and risk classification

(MiFID). “Thus our proposals are based on a unique, customer−level portfolio so that the goals of our customers can be fully achieved,” Szabó said. Besides securities the system also takes into account deposits, building savings, fund savings, insurance, pension and tax− efficient account opportunities and offers the desired portfolio compilation. DIRECT CONTACT “We also think that it’s very important to offer the client direct telephone contact on which a long−term relationship of trust is built. By appointment options are also very popular among our clients, as is the wait−free service and investment advice,” said Tímea Herbert from UniCredit Bank. Of course not every premium clients is really interested in having personal ser− vice every day. “It’s up to their attitude how often they need our personal services and advice,” Matus, from CIB, said. CAPITAL OUTFLOW One of the major problems in Hungarian business life today is the capital outflow. Premium services are one way to ensure that clients don’t feel the need to have for−

eign bank accounts, and Matus explained that CIB Bank hasn’t experienced a gen− eral capital outflow as far as its own pre− mium clients are concerned. “In fact the capital held by premium cli− ents at CIB increased last year, so we don’t think that capital outflow affects us much. This is mainly based on the knowledge of the client’s personal advisor in providing premium financial counseling and con− tinuing care services for the portfolio,” Matus emphasized. CAUSE AND EFFECT Do lessons learned from the premium ser− vices affect banking services in general? UniCredit’s Herbert thinks so. “The bank− ing market is constantly changing, vari− ous influences are affecting it, which are creating a wide range of changes. These include the expansion of a customer focus, which brought with it the introduc− tion of the segmentation of several ser− vices so that different customer needs are better served, and a more efficient ser− vice can be provided. The real winners of this process are clients who prefer to have their needs tailored to their economic sit− uation,” she emphasized.

EXPERT OPINION

THE OUTLOOK FOR REAL ESTATE FINANCING IN HUNGARY 2013 With real estate investment transactions for 2012 totaling only €120 million and new supply of commercial real estate 75% or more down on historic levels for 2013 and 2014, it is clear that not only has there been a dramatic and necessary response to the oversupply of commercial space but that the availability of domestic bank debt financing is extremely limited. Alan A. Vincent Managing Director www.convergen−ce.com t would be easy to blame the lack of bank financing on the bank tax and political tensions between the government and foreign owned banks. However, the primary cause of the lack of bank financing to real estate is due to the foreign owned banks illiquidity, exacerbated by the increased capital adequacy requirements of Basle III. As in the early 1990s recession, it is their natural tendency to withdraw funds from peripheral markets such as Hungary to pro-

tect the health and security of their home country core markets. Clearly also, the large portfolios of repossessed properties which the local banks have accumulated has not only caused them to view real estate financing as high risk but has consumed the time and resources of all of their in house real estate personnel for the last three years. These causes resulted in a total lack of bank financing for real estate from local banks in 2011, but there were some signs of a trickle of funds coming back into the market by the end of the year. Two international banks were able (after approvals processes of up to 12 months) to provide financing to two large pre-leased office developments last year. Of course, the interest rate margin

terms are two to three times higher and the ancillary costs of this new debt are at least double what they were five years ago, on top of a maximum of 70% leverage. So does this trickle of new debt constitute the “green shoots” of a recovery in bank debt financing? Sadly not, in my opinion. The first problem is that very little of the banks repossessed properties have been released to the market at anywhere near realistic pricing levels. With sympathy for the banks reluctance to acknowledge and write down their losses, nevertheless the resulting lack of repricing of real estate assets in the market will stall any true recovery indefinitely. However, as the banks are no doubt discovering, the costs of holding these properties will, after two or three more years, exceed the potential loss write down they should ideally have faced between 2010 and 2012. It is only a matter of time therefore, before the banks will be forced to market repossessed stock and take the necessary write downs. In the meantime, therefore, is the outlook for real estate financing in 2013 completely negative? It does not need to be! Traditionally in mature real estate markets, the lack of bank financing or the high cost of what little is available, creates opportunities for other sources. As mentioned above, the tendency of foreignowned banks to protect their home markets causes a strong argument for expansion of a more local banking market. This is an opportunity which has been identified by the likes of Granit Bank (although it is not yet providing real estate financing). We can also consider sources of private equity and mezzanine financing due to a reduction in the margin between their relative interest rates and costs compared to banks. However, their resources

tend to be limited. Where to look then for large sources of alternative debt financing? Not for nothing has the institutional investment market in the UK and Germany been dominated by insurance companies and pension funds for decades. Typically, such institutions have provided funding, either on a forward purchase basis for developments, or through their diverse fund businesses, to investors of built and let real estate, especially in the prime sector. Generally speaking, they have stepped into the market at exactly times like these, at the bottom of the value cycle, when the perceived and actual risks of value loss for their more conservative clients are limited. In Hungary so far, this is a sector that has largely failed to materialize. The reason is that it has been inhibited by past, well intentioned risk averse government regulation, which limited the extent of funds allowed to be allocated by insurance companies into real estate investments. In the continued absence of bank debt financing for real estate, therefore, it would be well worth the time of a government which wishes to revive this sector (with its large and direct impact on construction sector employment), to reconsider outdated statutory limitations on alternative sources of real estate financing. I would go further and say that positive encouragement through tax breaks and similar incentives, to investment in real estate by insurance companies and pension funds, would not only benefit the sector and the economy in general but also the long term investment returns of these institutions.

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

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Budapest Business Journal | March 22 – April 04

EXPERT OPINION

MATOLCSY SECURITISATION, THE PREPARES TO OLD-NEW ALTERNAPUT CENTRAL TIVE FINANCING TOOL BANK TOOLS TO USE

GERGŐ RÁCZ

After being named the successor to András Simor as head of the central bank, Matolcsy made it clear that things will indeed be different and that the MNB will be looking into new meth− ods to support its pri− mary mandate of pre− serving price stability and keeping inflation in check, and will also play a more active role in supporting govern− ment economic policies and fueling growth. Prior to his appointment Matolcsy was already speculating that the level of international reserves monitored by the central bank is unnecessarily high, while the interest rate is likewise high and hinders corporate lending and arguing that, in gen− eral, the MNB should be more supportive of the government. At his first committee hearing as candi− date for MNB governor, Matolcsy spoke of a possible 16 tools that could potentially be put to use to support central policy, once their impacts have been properly evaluated. Coincidentally, the central bank has invited its own employees to submit research papers evaluating the past and the future in exactly 16 categories.

countries where the base rate is essen− tially 0%, as in the United States. In some− where like Hungary, where the base rate was closer to 7% at the time, the effect would be contrary to the goal, he argued and would raise stability concerns. The current monetary easing cycle that was commenced last August by the so− called external members of the Monetary Policy Council is also set to continue, in line with widespread market expec− tations. A call for papers under the sub− ject “the positive effects of the MNB’s rate cutting measures of the past months for the financial sector and the real econ− omy” hardly points towards a reversal. Simor also rejected the government hopes of reducing the base rate, claiming it has no effect whatsoever on eco− nomic growth, because the muted lending activity in Hungary is caused by the banks’ lack of willing− ness to lend in the uncer− tain environment that is Hungary’s economy. Since the main issue for busi− nesses is their low capital− ization, they consequently lack the ability to raise the down payments for any developments. He argued that if companies weren’t eligible to get a loan to start with, they would hardly care what interest rates various prod− ucts come with.

MATOLCSY: IN GENERAL, THE MNB SHOULD BE MORE SUPPORTIVE OF THE GOVERNMENT.

EASING ALL THE WAY In the past, government officials, while being only carefully critical of the central bank also strongly hinted that they would prefer the MNB take a page out of its bigger peers’ playbook in a bid to fuel the econ− omy. It is no wonder that there are invita− tions for central bank researchers to explore the benefits of the quantitative easing steps in the United States as well as similar mea− sures taken by the European Central Bank and the Bank of England. Simor’s MNB rejected such measures, saying they could be effective only in

FALL IN LINE The “guided” nature of the 16 subjects is also an indication of the kind of professional work that Matolcsy’s central bank wants of its employees, many of whom were dismissed from their posts shortly after his arrival. While staff research, and especially the periodic quarterly report, previously served as the basis for policy decisions that Simor and his two deputies observed, the external members often ignored it. Now, with papers called to evaluate the responsibilities of the proliferation of foreign currency loans as well as the adverse impact of the previous central bank’s management neglecting to employ certain monetary tools, it is clear that opinions dissenting from the government’s already established approach will not be appreciated. The best pieces will be rewarded with HUF 300,000 with the final submission date being set for April 7. Matolcsy will most likely announce the first specifics on March 26 following a rate− setting meeting of the Monetary Policy Council, the first for Matolcsy and the newly appointed members of the panel.

Csaba Ember C Se Senior Associate, H Head of Banking & Finance hat is this magic word “securitization”? It is a method of finance whereby a lender, instead of lending money to a company to finance its general business, and looking to the company to repay that lending from the profits of that business as a whole, agrees to look solely to the assets which are the subject of the securitization for repayment. This should be distinguished from a secured loan: in a classic securitization, the borrower does not borrow money and grant security over an income-producing asset to ensure repayment, he sells the income-producing asset and the money he receives for that sale does not constitute a debt from a legal perspective. Securitization is a relatively new financial technique, although it now accounts for a large portion of the funds raised in the international capital markets. The first transactions were done in the United States in the 1970s, using first mortgage loans and then credit card receivables. The first European transactions were carried out in the United Kingdom in the late 1980s, and also involved mortgage loans. Nowadays, securitization is a mainstream financing technique employed by almost all financial institutions worldwide and most large corporations in Western Europe. The technique has always been attractive to emerging market participants, allowing them access to cheaper funding than they can otherwise obtain. STRUCTURE OF SECURITIZATION

In a securitization transaction the entity that is selling the income-producing assets and receives the funds realized by the securitization is the “originator”. The income-producing assets sold by the originator are the “receivables”. The list of the types of receivables which have been used for securitizations is long; starting with mortgage loans and credit card receivables, the technique has since been applied to a wide variety of trade receivables, toll road receipts, bank loans, leasing payments, student loans, health care facilities, car loans, non performing loans etc. The entity to which the originator sells the assets is the “issuer”, usually a spe-

cial purpose vehicle (“SPV”) created specifically for the purpose of the transaction. The issuer/SPV raises funds to purchase the receivables from the originator by issuing notes in the capital markets (“asset backed securities” or “ABS”), which are purchased by “investors”. In a classic securitization, the transfer of the receivables to the issuer should be done by way of a “true sale” – i.e. should be done in such a manner that it will survive the subsequent insolvency of the originator so that no liquidator or third party creditor of the originator will have a claim to the receivables. RATIONAL FOR SECURITIZATION

Different market players have different reasons for deciding to use securitization as a financing tool. For some, very large issuers it makes sense to diversify their sources of funds as much as possible. For financial institutions such as banks, mortgage lenders and credit card providers, securitization is an invaluable risk management tool, allowing them to remove assets representing business already done from their balance sheets, freeing up regulatory capital to allow them to do new business and originate new assets. With the advent of the Basel III capital adequacy rules, derecognition is increasingly being superseded by other motivations for securitization. For emerging market issuers, the greatest attraction of securitization is almost certainly the cheaper cost of funds they can obtain, as compared to straight unsecured borrowing. HUNGARY

There have been very few securitization transactions in Hungary and the financial crisis halted the appetite of originators and investors for new transactions. Although there is no dedicated law on securitization in Hungary, those few transactions that were closed before the financial crisis are sound evidence that securitization is possible under Hungarian law. Nevertheless, a separate law – if implemented at all in the future – would give more comfort to the parties to a securitization transaction.

www.gide.com

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Newly appointed central bank governor György Matolcsy has yet to announce exactly which tools the National Bank of Hungary will put to use, but now there is an internal call for study papers that may give market participants an indication of the options on the table.

Market players are talking about reviving the securitization market as an alternative financing solution for corporates in the European market. A few years ago, securitization was blamed for triggering the financial crisis, however, there are now signs of change, with issuers slowly beginning to reconsider the market as investor appetite returns.

WWW.BBJ.HU

Budapest Business Journal | March 22 – April 04

CORPORATE FINANCE: VENTURE CAPITAL LEADS THE WAY The Hungarian corporate finance market seems to be reshuffling, at least for the small− and medium− sized enterprises. While the traditional role played by of stock exchange participation and bank loans is repressed, the presence of venture capital is getting stronger due to the support of EU funds. KRISZTIÁN KUMMER

Prior to 2009, the financing of small− and medium−sized enterprises happened mainly through external capital via bank loans, leasing etc. The involvement of pri− vate equity or venture capital in financing was marginal. However, in recent years, banks have suffered many punches – from the financial crisis to the bank tax and early repayment scheme. This last item alone caused an approximately HUF 370 billion loss to the financial sector at the end of 2011, while in Q4 2012 Hungarian credit banks have lost HUF 150 bln. ADVERTISEMENT

Decreasing assets and creditworthiness of clients hit corporate loans and listings on the Budapest Stock Exchange also lost their previous attraction – at least tempo− rary. Last year, three companies (Fevi− tan, Fotex and TvNetWork) left the bourse and only one, Business Telecom, came to the floor. “Raising capital through stock exchanges is stagnating all over the world, including Hungary. However we hope that we can enlist some companies this year and the number of listings will grow in the middle term,” said Dr. Rita Szalay, Deputy Director of the Listing and Supervisory Division said. VENTURING AHEAD But not every financing branch look so gloomy. While in the case of many macroeconomic indicators Hungary is a laggard, in the case of venture capi− tal investments the country is in the lead. Eurostat statistics are available only until 2011, but according to them, Hungarian venture capital investments are exceptionally high, even by Western European standards. With total venture capital investments amounting to 0.40% of GDP, Hungary is fifth on the Euro− pean list after Sweden, Denmark, Fin− land and the UK.

Of course, not every good Hungar− ian idea backed by venture capital has or will become huge success stories, but the examples of web−based presentation tool Prezi and remote access software LogMeIn have shown the way for many startup companies that venture capital funds can pick from. However, the very good indicators in this field are not due to the rush of foreign businesspeople who want to invest here in Hungary, but rather to the European Union, which is investing a small fortune in its JEREMIE business development programs. JEREMIE TO THE RESCUE Overall, JEREMIE (Joint European Resources for Micro to Medium Enter− prises) programs have HUF 40−45 bil− lion of funds. “Capital is abundant and competition is growing as JEREMIE Phase I and Phase II funds will be work− ing in parallel this year,” said Levente Zsembery, CEO of Biggeorge NV Equi− ty’s Venture Capital Fund Management. While volatile balances and unpredict− ability usually deter banks from lending to micro and small companies, venture capital is accustomed to these condi− tions. “Venture capital doesn’t invest less in companies just because of low

predictability. However, return rates may suffer from the macroeconomic environment,” Zsembery told the Buda− pest Business Journal. The first capital investments are usu− ally in a range between HUF 50−100 million, with the fund managers respon− sible for the JEREMIE money usually aiming to exit in three−to−seven years with a return of 20−25% per year. While the VC investment rates are high even from an international point of view, they don’t automatically produce economic growth, as the rate of success will be decided on exit. Up to now, the eight funds participating in the JEREMIE programs have only one real success story: Cryo Management Ltd, which develops, produces, and markets time− lapse products for the In vitro fertiliza− tion market, has been bought by Swed− ish company Vitrolife for €5 million. But VC has its own recipe to avoid too much uncertainty. “Because of the unpredictable domestic conditions, ven− ture capital funds prefer enterprises that could enter international markets as well to ensure adequate growth and return rates,” András Szombati, Hun− garian Private Equity and Venture Capi− tal Association board member said.

WWW.BBJ.HU

Budapest Business Journal | March 22 – April 04

COMMERCIAL BANKS

(1)

RANK

In alphabetical order(2)

COMPANY WEBSITE

AXA BANK EUROPE S.A. MAGYARORSZÁGI FIÓKTELEPE

EQUITY (HUF MLN)

NO. OF BANK BRANCHES IN HUNGARY IN SEPT. 2012

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE

ADDRESS PHONE FAX EMAIL

–37,277

1,229

– AXA Holding S.A (100)

Albert Roggemans

1138 Budapest, Váci út 135-139. (1) 465-6565 (1) 465-6599 info.axa@axa.hu

–1,110

5,441

– Banco Popolare Societá Cooperativa (100)

Vincenzo Fasano

1088 Budapest, Rákóczi út 1–3. (40) 200-515 (1) 266-6815 bancopopolare@bancopopolare.hu

Laurent Poiron

1051 Budapest, Széchenyi István tér 7–8. (1) 374-6300 (1) 269-3967 info.hu@bnpparibas.com

TOTAL ASSETS IN 2011 (HUF BLN)

PRE-TAX PROFIT IN 2011 (HUF MLN)

–

www.axa.hu

BANCO POPOLARE HUNGARY BANK ZRT

BNP PARIBAS MAGYARORSZÁGI FIÓKTELEPE

BUDAPEST BANK NYRT

CIB BANK ZRT

CITIBANK EUROPE PLC. MAGYARORSZÁGI FIÓKTELEPE

www.bancopopolare.hu

www.bnpparibas.hu

www.budapestbank.hu

www.cib.hu

389

9,561

– BNP Paribas S.A (100)

925

5,020

112,323

128

– GE Capital International Financing Corp. (100)

György Zolnai

1138 Budapest, Váci út 193. (1) 450-6000 (1) 450-6001 info@budapestbank.hu

2,524

–52,337

201,213

119

– Intesa Sanpaolo Holding International S.A. (67.70), Intesa Sanpaolo S.p.A. (32.30)

Fabrizio Centrone

1027 Budapest, Medve utca 4–14. (1) 423-1000 (1) 489-6500 cib@cib.hu

813

16,441

– Citibank Holdings Ireland Ltd. (75), Citibank Overseas Investment Corporation (15), Citibank A.S. (10)

Batara Sianturi

1051 Budapest, Szabadság tér 7. (1) 374-5000 (1) 374-5100 –

292

2,743

24,148

– Commerzbank Auslandsbanken Holding AG (100)

András Kozma

1054 Budapest, Széchenyi rakpart 8. (1) 374-8100 (1) 269-4574 info.budapest@commerzbank.com

www.citibank.hu

COMMERZBANK ZRT www.commerzbank.hu

HOUSEHOLD BOND PURCHASES AND THEIR IMPACT ON LENDING Domestic holdings of Hungarian public debt have been soaring since the start of 2013, with households getting involved like never before. But what is good news for the state in terms of financing may only go to further restrict the banking sector’s already thin liquidity. GERGŐ RÁCZ

Hungary’s economy ended 2012 with a con− traction of 1.7% and any hopes for signifi− cant growth this year are muted at best. The government is determined to spur growth, mainly through the better distribution of European Union funds while trying to secure the country’s own finances from the market. Conspicuously missing from the arrange− ment is a significant increase in private sec− tor investments, which could only come if pri− vately owned banks increase their corporate lending to facilitate the creation of new invest− ment, new capacities and new jobs. Having finalized the temporary bank tax last year, and with an eye on eventu− ally increasing the state’s overall role in the

finance system to breach the 50% mark, it would appear that the government has lit− tle expectation that extensive lending will become available once more anytime soon. PROMOTING THE HOME-GROWN The government has made no secret of the fact that it wants to reduce the risks to the country’s finances stemming from the large proportion of Hungarian bonds in foreign hands. Currently, foreign investors control some HUF 4.8 trillion of the overall HUF 21.8 tln; the biggest single share is held by Tem− pleton Investments, which controls more than HUF 1 tln of Hungary’s total debt. Even when the waves were crashing over the country’s economy in 2012 and bond yields were at times hovering at an astro− nomical 11%, Prime Minister Viktor Orbán used the opportunity to encourage domestic households to put their savings in Hungarian bonds, promoting them as an excellent invest− ment opportunity with high returns. The state hasn’t stopped its ambitious efforts to attract domestic savings and is apparently succeeding. Last year, state debt management agency ÁKK introduced a new instrument, the Pemák, a euro−denominated bond targeted specifically at households. Originally, the goal was to issue €200 mil− lion worth of the paper.

By early 2013, some €1.45 billion of the bond has been sold, only 11.3% of which went to households: 85.7% went to domestic insti− tutional investors and 3% to foreigners, even though the latter two weren’t in the original target group. Pemák still offers attractive yields of 8.5% for a duration of three years, especially compared to the dropping inter− ests on bank deposits that are currently deter− mined based on the 5.25% base rate, which is widely expected to be reduced further as the year progresses. Besides attractive alternative investments, the banking sector also has to cope with the issue of toxic policies that remain in their portfolios, which are all the more troubling seeing the percentage of more affluent foreign currency mortgage debtors who were able to avail themselves of the early debt repayment scheme early last year. The combined effects of the scheme and the selloff at the start of last year led to a total of HUF 263 bln leaving Hun− gary’s banking system in January alone, according to central bank figures. NOTHING BUT A MYTH? The ÁKK dismissed the adverse effects of increased household bond purchases on bank loans when queried by the Buda− pest Business Journal.

The agency released a study in 2012 that cited historic data showing that demand for deposits and bonds corre− lates, and both types of investments are mainly affected by investor sentiment at any given time: if demand for deposits increases, the same applies for bonds. Furthermore, it noted that figures from the central bank showed that some HUF 3.5 tln was extracted from the Hungarian banking system between 2011 and mid− 2012 alone. This suggests that not only is any increased demand for bonds not a detriment to bank financing, but that any deposits could at best go to sponsoring the finance industry’s deleveraging efforts when considering the banking sector’s reac− tion to crisis times. While interest for Hungarian papers includ− ing Pemák is unwavering, there is still little hope of a significant upswing in lending. The central bank’s latest lending survey found that conditions for household lend− ing loosened somewhat in the last quarter of 2012 and the respondents to the study expect an uptick in demand for loans cov− ering housing purchases. However, the terms for business loans – the very type that could have a firmer effect on eco− nomic growth – are set to remain in their current discouraging state.

WWW.BBJ.HU

Budapest Business Journal | March 22 â€“ April 04

RANK

COMPANY WEBSITE

DEUTSCHE BANK AG MAGYARORSZĂ GI FIĂ“KTELEPE

EQUITY (HUF MLN)

NO. OF BANK BRANCHES IN HUNGARY IN SEPT. 2012

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE

ADDRESS PHONE FAX EMAIL

289

13,730

â€“

â€“ Deutsche Bank AG (100)

ZoltĂĄn Kurali

1054 Budapest, Hold utca 27. (1) 301-3700 (1) 269-3239 db.hungary@db.com

2,766

Individual (37.70), â€“ (58.70) â€“ (3.60)

Zsolt Szalai

7800 SiklĂłs, FelszabadulĂĄs Ăştja 46â€“48. (72) 805-800 (72) 805-827 info@drbbank.hu

3,247

â€“147,572

171,580

143

â€“ EGB Ceps Holding GmbH (100)

Jelasity RadovĂĄn

%XGDSHVW 1pSIÂ UGĹƒ XWFD Â˛ (40) 555-444 (1) 373-2499 uszolg@erste.hu

399

â€“6,839

29,099

â€“

FHB JelzĂĄlogbank Nyrt (70.30) FHB subsidiaries (29.70)

Gyula KĂśbli

%XGDSHVW hOOĹƒL ~W (40) 344-344 (1) 329-0992 fhb@fhb.hu

â€“533

2,215

0DJ\DU 7ĹƒNHWiUVDViJ EPM Kft (5.70), Individuals (2.50) â€“

Ă‰va HegedĂťs

1095 Budapest, Lechner Ă–dĂśn fasor 8. (40) 100-777 (1) 235-5906 info@granitbank.hu

380

9,162

43,645

â€“ ING Bank N.V. (100)

IstvĂĄn SalgĂł

1068 Budapest, DĂłzsa GyĂśrgy Ăşt 84/B (1) 268-0140, (1) 235-8700 (1) 268-0159, (1) 269-6447 ing@ing.hu

231

â€“ KBC Bank N.V (100)

Hendrik Scheerlinck

1095 Budapest, Lechner Ă–dĂśn fasor 9. (1) 328-9000 (1) 328-9696 bank@kh.hu

Chung, Hun Jin

1054 Budapest, Bajcsy-Zsilinszky Ăşt 42â€“46. (40) 532-532 (1) 328-5454 kdbkontakt@kdb.hu

TOTAL ASSETS IN 2011 (HUF BLN)

PRE-TAX PROFIT IN 2011 (HUF MLN)

www.db.com/hungary

DRB DĂ‰L-DUNĂ NTĂšLI REGIONĂ LIS BANK ZRT

ERSTE BANK HUNGARY ZRT

FHB KERESKEDELMI BANK ZRT

GRĂ NIT BANK ZRT

ING BANK N.V. MAGYARORSZĂ GI FIĂ“KTELEPE

www.drbbank.hu

www.erste.hu

www.fhb.hu

www.granitbank.hu

www.ing.hu

K&H BANK ZRT 14

2,870

www.kh.hu

KDB BANK (MAGYARORSZĂ G) ZRT 15 www.kdb.hu

KINIZSI BANK ZRT

MAGNET BANK ZRT

www.kinizsibank.hu

www.magnetbank.hu

MAGYAR CETELEM BANK ZRT 18 www.cetelem.hu

MAGYAR TAKARĂ‰KSZĂ–VETKEZETI BANK ZRT

MAGYARORSZĂ GI VOLKSBANK ZRT

MKB BANK ZRT

OBERBANK AG MAGYARORSZĂ GI FIĂ“KTELEP

www.takarekbank.hu

www.volksbank.hu

www.mkb.hu

www.oberbank.hu

OTP BANK NYRT

RAIFFEISEN BANK ZRT

SOPRON BANK BURGENLAND ZRT

UNICREDIT BANK HUNGARY ZRT

www.otpbank.hu

www.raiffeisen.hu

www.sopronbank.hu

www.unicredit.hu

4,430

180,770

161

495

26,273

â€“ Korea Development Bank (100)

433

3,582

â€“

Individuals (100) â€“

Antal Lakatos

8200 VeszprĂŠm, Ă“vĂĄros tĂŠr 22. (88) 420-220 (88) 420-220 info@kinizsibank.hu

810

Individuals and companies (70) Caja Navarra (30)

Zsolt FĂĄy

1062 Budapest, AndrĂĄssy Ăşt 98. (1) 428-8888 (1) 428-8889 info@magnetbank.hu

Emmanuel Bourg

1062 Budapest, TerĂŠz kĂśrĂşt 55â€“57. (Eiffel TĂŠr IrodahĂĄz) (1) 458-6070 â€“ cetelem@cetelem.hu

11,569

21,126

â€“ BNPP Personal Finance S.A. (100)

369

1,060

14,522

â€“

Savings cooperatives (61.54) DZ Bank AG (38.46)

PĂŠter CsicsĂĄky

1122 Budapest, PethĂŠnyi kĂśz 10. (1) 202-3777 (1) 356-2649 info@tbank.hu

550

â€“32,158

10,654

â€“ Sberbank Europe AG (98.93), TĂźrkiye Halk Bankasi (1.07)

Axel Hummel

1088 Budapest, RĂĄkĂłczi Ăşt 7. (1) 328-6666 (1) 328-6660 volksbank@volksbank.hu

2,870

â€“111339

78,233

â€“ Bayerische Landesbank (89.89), Other (10.11)

PĂĄl SimĂĄk

1056 Budapest, VĂĄci utca 38. (1) 327-8600 (1) 327-8700 telebankar@mkb.hu

â€“299

â€“2696

â€“

â€“ Oberbank AG (100)

Peter SzenkurĂśk, TamĂĄs Fischer

1062 Budapest, VĂĄci Ăşt 1â€“3. (1) 298-2900 (1) 298-2975 bp@oberbank.hu

SĂĄndor CsĂĄnyi

1051 Budapest, NĂĄdor utca 16. (1) 473-5000 (1) 473-5955 informacio@otpbank.hu

10,200

154,465

1,028,261

382

Individuals and companies (28.30), Hungarian State (0.40), Own shares (1.70), Employees (1.70) Individuals and companies (62.60), Others (5.30)

2,349

â€“75,094

65,509

132

â€“ Raiffeisen-RBHU Holding GmbH (100)

Heinz Wiedner

1054 Budapest, AkadĂŠmia utca 6. (40) 484 -848, (1) 484-8484 (40) 484-4444 info@raiffeisen.hu

101

â€“2,362

5,455

â€“ Hypo-Bank Burgenland AG (100)

Mag. Andrea Maller-WeiĂ&#x;

9400 Sopron, Kossuth L. utca 19. (99) 513-000 (99) 513-038 sopronbank@sopronbank.hu

1,698

18,218

145,493

120

â€“ UniCredit Bank Austria AG (100)

MihĂĄly Patai

1054 Budapest, SzabadsĂĄg tĂŠr 5-6. (1) 301-1271 (1) 353-4959 info@unicreditgroup.hu

NOTES: (1) From the database of Hungarian Financial Supervisory Authority. (2) The latest available data for the total assets of commercial banks are from 2011, therefore the BBJ chose to list the banks in alphabetical order.

Âť= would not disclose, NR NA = not applicable

= not ranked,

This list was compiled from responses to questionnaires received by March 20, 2013 and publicly available data. To the best of the Budapest Business Journalâ€™s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, MadĂĄch Imre Ăşt 13â€“14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

BOOK REVIEW

A witty read for women (and men)

WHO’S NEWS

RESTAURANT REVIEW

A touch of tradition: Macesz Huszár

PEOPLE ON THE MOVE Gábor Orbán state secretary at the Economy Ministry

BUDAPEST

DREAMS If a society is defined by the dreams it dares to dream, Budapest is definitely one of the biggest players in the region. But if residents can’t help a sarcastic comment or two when city leaders ‘dream big’, they have good reason. On the following pages we list a few iconic projects that aimed to make their mark on the face of the city, but managed instead to contribute to citizens’ skepticism. ZSOLT BALLA

➜ READ ON

WWW.BBJ.HU

Budapest Business Journal | March 22 – April 04

➜ BUDAPEST DREAMS STORY HIGHLIGHTS ■

HUF 154.4 bln would be spent on museum quarter ■ Renamed square will get longawaited facelift

METRO LINE 4 When it comes to Budapest’s “dream proj− ects”, you help but begin with the fourth subway line, the original idea for which goes back to 1972. If that date seems too distant, consider this: the plans for the subway line being executed now have been around for 18 years. The study that set the current path for the Metro was written in 1996. The first announcement of the actual building of the line came from then−Budapest mayor Gábor Dem− szky, who said in January 1998 that it would be completed by 2003. The costs of the project were estimated to be roughly HUF 130 billion at the time. After years of debates and minor changes to the plan, work finally began in 2004, with a new completion target date of 2008, and a new projected budget of HUF 195 bln. While it is next to impossible to tally all the difficulties and arguments around the construction, it is enough to recall that although the subway line is now func− tionally ready (the first trains on the line departed last November) the current tar− get date for opening it to the public is still in somewhat farther of: March 2014, to be more precise. Some of the sites of the build− ing work have been closed off since 2008, including high traffic areas, such as Baross Gábor tér next to the Keleti railway station, and Kálvin tér in downtown Pest. In the meantime, most Budapesters think that the fourth subway line is a mere fic− tion, and the project has become an icon for the typical Hungarian failure. The costs of the project are now estimated to be around HUF 452.5 bln. And that is for the first sec− tion of the line alone. The costs for complet− ing the whole subway currently reside in the area of the unknown. CASTLE BAZAAR The tender of the Swietelski−WHB consor− tium won the right to reconstruct the Castle Bazaar with its offer of HUF 8.99 bln. The municipality of Budapest’s District I will also chip in with some HUF 6.4 bln to sup− port the project, mostly using EU−funding. Contracts were signed earlier this year, and the cranes are already in place. Work is set to begin this spring as the target deadline of March 30, 2014 miraculously coincides with the date of the upcoming general elec− tions, and should not, therefore, be missed. But the saga behind the project is not quite as plain as it seems now. Once a busy commercial neighborhood, later an infa− mous youth hangout in the 1960s and ’70s, the Castle Bazaar has been in ruins for almost three decades. After years of contin− ual degradation, a wall of the building actu− ally collapsed during a concert of the leg− endary rock group Edda in 1980, and the venue was finally closed down in 1984. The bazaar, located in the immediate vicinity of landmark buildings such as the

Lánchíd and Buda Castle, has been a black spot of the city ever since the overthrow− ing of the communist regime in 1989. What seems like innumerable plans have been drawn up for the reconstruction of the area, but all failed due to a lack of commitment, funding, and last but not least, a lengthy legal debate around ownership of the plot. According to the latest plans, the area will include a ‘Home of contemporary cre− ativity’, an array of studios let out to young artists, restaurants, pubs, even a small stage for concerts and performances and a touristy area of shops featuring traditional and contemporary crafts. MUSEUM QUARTER The vision of building entire quarters has been haunting Hungarian governments for quite some time: after the spectacu− lar failure of the space−age Government Quarter, which would have reshaped the face of districts 6 and 13 between Nyu− gati Pályaudvar and Hungária körút in 2008, the Orbán government came up with a different idea in a different location. The Museum Quarter would completely reshape the Városliget area for the mam− moth amount of around HUF 154.4 bln. Although to date we know very little about the project, it already has a dedicated Ministerial Commissioner, László Baán, who is also the director of the Museum of Fine Arts, and it has been said that the building complex is expected to be “iconic”. The five buildings would be home to six museums, arranging some of the most important public collections in one area. The Ethnographic Museum, the Hungarian Photography Museum, the New National Gallery, the Ludwig Museum, the House of the Hungarian Music, and the Museum of Hungarian Architecture would all move in once the quarter is ready.

SZÉLL KÁLMÁN TÉR PRESENT DAY

MUSEUM QUARTER

METRO LINE 4

M0 MEGYERI BRIDGE

Although the details sound intriguing, no visualization has been published yet. The general concept of the project, which will also take in the entire Városliget area, and include the refurbishment of the Petőfi Csarnok cultural center and the utilization of the now defunct Olof Palme House, will be ready by April 2013, and the procure−

ment tender will be put out in 2014. The target date for opening the new quarter is currently 2018, and funding is expected to originate from the EU’s new budgetary cycle, set to begin next year. As with all excessive plans, a hint of suspicion always remains in the background. Espe− cially if you consider that Budapest hasn’t

seen a successfully completed procure− ment for construction of a public building in the past nine years. A FOOTBRIDGE OVER THE DANUBE A footbridge over the Danube would be nothing more than yet another fic− tional idea of the city leadership had

WWW.BBJ.HU

Budapest Business Journal | March 22 – April 04

FOOTBRIDGE OVER THE DANUBE

CASTLE BAZAAR

Tamás Fellegi not mentioned it in an interview with commercial chan− nel TV2 in 2011. The then Minister of National Resources said that the plans of renowned architect József Finta were on the table of the government, and that the new Széchenyi Action Plan had suf− ficient funding to complete it.

The bridge would be located in the southern area of the city, between the Petőfi and Lágymányosi bridges and the multi−story building would also function as a cultural and social center, complete with restaurants and coffees. While to most Budapest residents (espe− cially those promoting the cyclists’ life− style) the concept of a pedestrian bridge is more than welcome, where to put it is a matter of some hot debate. Bridges in downtown Budapest are usually located about one km from one another – there is, however, an obvious gap between Lánchíd and Margit híd. Many say that the loca− tion of the former Kossuth híd, connect− ing Parliament with Batthyány tér, built after WWII but removed in 1960, would be ideal. Others would prefer the southern university area, connecting the campuses of ELTE, BME and BCE. Yet another poten− tial location is a bridge between the soon− to−be reconstructed Castle Bazaar and the Duna korzó on the Pest side. Supporters of the footbridge highlight that the 3,000 km stretch of the Danube includes some 300 bridges, 45 of which are dedicated to pedestrians and cyclists. The southernmost of these bridges is located in Vienna. Given its size, the popularity of cycling and the importance of tourism can be factored in as supporting arguments for a footbridge, they say. THE RENEWAL OF THE SZÉLL KÁLMÁN TÉR When the first plans to reconstruct one of the most important traffic hubs of the Buda side were released, the square was called Moszkva tér. Well, the first few sets of plans, actually. But due to the fail− ure of those plans, Moszkva tér will never be renewed; one of the first actions of Ist− ván Tarlós was to rename the location Széll Kálmán tér right after he took oath as Mayor of Budapest in 2010. According to the latest plans, the refur− bishment of the square will cost some HUF 4.2 bln, and will include a complete renewal, changing the location’s landscape as it is. Of the 23 architectural studios that participated at the tender put out in 2011, the winning concept was handed in by Épí− tész Stúdió Kft and Lépték Terv Kft. The concept, as stated by chief architect Sándor Finta, managed to find a balance between an important traffic hub and the functional− ity of a traditional public area. The planning phase is expected to be complete by the spring of 2013, and accord− ing to the current schedule actual construc−

tion can begin in 2014. While the plan con− tains the renewal of the square’s buildings and green areas, much of the budget is ded− icated to the reconstruction of the adjoin− ing tramway lines – the funding of this is expected to be sourced, once again, from the EU’s new budgetary cycle. THE M0 RING AROUND BUDAPEST One of the most important projects for the transformation of Budapest into a true metropolis was the building of its M0 orbital motorway around the city. But while most of the project was com− pleted years ago (with the opening of the

Megyeri híd in 2008), the remaining part which would “close” the ring is likely to remain a dream – mostly due to the pro− test of local residents in Budakalász and other nearby villages. While the lack of funding remains the primary case for the death of most gran− diose urban projects, in this instance, the scenario is somewhat different. Villages adjacent to the planned route of the miss− ing 38km of motorway are unequivocally against the project for a variety of com− pletely understandable reasons: noise, pollution and increased traffic. Most notably, Budakalász (the next village the road would approach after crossing Highway 11 at the Buda head of Megyeri híd), where a civil resistance movement was formed against the highway, offer− ing alternate routes and threatening to blockade traffic on the existing parts of M0 should officials choose not to hear their voice. But other villages, including Üröm, Pilisborosjenő and Solymár are also strongly against the extension of the orbital motorway. As a result of these rather strident voices and determined opposition, regardless of any possible financing issues, building the missing part of the M0 and closing the ring around Budapest is likely to remain what it currently is: a Budapest Pipedream.

GKI Economic Research Co. We analyze and forecast. You decide.

ECONOMIC GOVERNANCE IN A CALMING STORM

INTERNATIONAL CONFERENCE – 20th anniversary of the foundation of GKI Economic Research Co.

26 March, 2013 (Tuesday) Corinthia Hotel (Budapest, VII. Erzsébet krt. 43-49.)

Date: Venue: Programme: 8:15 9:00

REGISTRATION Opening: László AKAR (GCEO GKI) Welcome speech: András VÉRTES (Chairman, GKI) CRISIS MANAGEMENT IN THE EU AND IN HUNGARY Elena FLORES, Director, DG ECFIN, European Commission Speaker from the Government Administration (tbc) András KÁRMÁN, Director, EBRD THE TRANSFORMATION OF THE LABOUR MARKET IN THE CRISIS László ANDOR, Commissioner, European Commission

11:30 12:00 13.00

13:30

BUSINESS ENVIRONMENT IN HUNGARY Radovan JELASITY, Chairman and CEO, Erste Bank László PARRAGH, President, Hungarian Chamber of Commerce György WÁBERER, Chairman and CEO, Waberer’s International COFFEE BREAK ROUND TABLE DISCUSSION ON CREDIBILITY AND THE CREDIT Participants: Péter Ákos BOD, Csaba KÁKOSY, László URBÁN and András VÉRTES Moderator: István MADÁR. SOME FEATURES OF A NEW ECONOMIC POLICY Gordon BAJNAI, former Prime Minister Closing remarks: László AKAR BUFFET LUNCH

Participation fee: HUF47.000 + VAT (Taxes and parking fees shall be borne by the organizers.) Hungarian/English simultaneous translation. Detailed program and application: w w w.gki.hu I For more information: +36 1 318 1284

SPONSORS:

MEDIA SPONSORS:

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Budapest Business Journal | March 22 – April 04

BOOK REVIEW

A WITTY READ FOR WOMEN (AND MEN) Ask most women whether they have the right to equality at work and the answer will be a resounding yes. But ask the same women whether they’d feel confident asking for a raise, a promotion, or equal pay, and some reticence creeps in. The statistics, although an improve− ment on previous decades, are cer− tainly not in women’s favor – of 197 heads of state, only 22 are women. Women hold just 20% of seats in parlia− ments globally, and in the world of big business, a meager 18 of the Fortune 500 CEOs are women. Sheryl Sandberg is the COO of Facebook, and one of Fortune’s Most Powerful Women in Business. In Lean In, she draws on her own experiences, as well as academic research, to find practical answers to the problems fac− ADVERTISEMENT

ing women in the workplace. Learning to ‘lean in’ is about tackling the anx− ieties and preconceptions that stop women reaching the top; it’s about taking a place at the table and making yourself part of the debate. Sandberg recounts cases such as the Columbia Business School study that measured ‘likability’ amongst men and women in business. One group of students read a story about a success− ful venture capitalist named Heidi, another read about an equally power− ful entrepreneur named Howard. The feedback showed that Howard was the more likeable of the two, while Heidi was not ‘the type of person you would want to hire or work for’. In fact, both groups of students had read exactly the same story; the only details changed were the name and gender of the main character. This way of thinking may be deeply entrenched, but simply know− ing about it can give women a new per− spective on their careers. Sandberg goes beyond studies and research, using personal stories to illustrate her points. She describes

watching colleagues of both genders discredit successful women for being ‘too aggressive’ or ‘a bit political’, and admits to hiding her achievements in order to be better liked by her peers. While many of us may not enjoy the status that Sandberg has attained, we can certainly relate to the challenges she has faced. “Sheryl provides practical sugges− tions for managing and overcoming the challenges that arise on the ‘jungle gym’ of career advancement,” writes Former U.S. Secretary of State, Con− doleezza Rice. “I nodded my head in agreement and laughed out loud as I read these pages. Lean In is a superb, witty, candid, and meaningful read for women (and men) of all generations.”

LEAN IN by Sheryl Sandberg Published by WH Allen ISBN 9780753541630 Available to order through www.hungaropress.hu

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Budapest Business Journal | March 22 – April 04

RESTAURANT REVIEW

A TOUCH OF TRADITION: MACESZ HUSZÁR Macesz Huszár is a recently opened family−like restaurant in the middle of the old Jewish district, located at the corner of Dob utca and Kazinczy utca. Though not a kosher restaurant, it does follow Jewish dietary traditions, for example pork or fish not covered by scales is not on the menu. The atmosphere of the place reminded us of someone’s grandparents’ saloon, with the lace table clothes, wooden furniture and old chan− delier – specially redone for the place by the wife of the owner, a designer. Dávid Popovics, who runs Macesz Huszár, says that the chef has studied old family recipes; so having lunch on a Sunday here should recreate the tastes of a Hungarian Jewish family meal from 50−100 years ago. Dávid Popovics spends most of his time in the restaurant; talking to the guests and making them feel welcome and comfortable. Maybe that is the reason that the Mac− esz Huszár has become extremely popular ADVERTISEMENT

so soon after the opening; it is highly rec− ommended you reserve a table in advance. It is open for lunch from 11:30 am to 4 pm, and reopens for dinner from 6 pm till midnight. The menu looks simple at first glance, but apart from signature dishes such as broth with matzot balls, the egg salad variations and “flodni” (the famous poppy seed−apple−walnut dessert), it is changed quite frequently. We started our lunch with stuffed goose− neck – which was the best I have ever tasted – on pearl barley risotto. It was tasty and rich, yet kept the natural flavor of the meat. My friend took smoked bris− ket carpaccio on a bed of eggplant tartar. The meat was made perfectly spicy by the smoking process, and was soft and ten− der. The eggplant was unfortunately a bit plain, but March is not the season for juicy eggplants anyway. For the main course I choose rose lamb chops with mint−couscous omelet. The halal lamb came from the Turkish butcher in Budapest and tasted – without exag− geration – like a dream. The fresh, minty

fee cream. The soufflé was freshly baked; hot and soft on the inside, baked perfectly on the outside. The cream was a great sur− prise: light, sweet and white, it had black coffee powder mixed in, making it sweet and bitter at the same time. The mille feuille was light and the almonds were crunchy in the cream. While finishing our superb lunch with a black espresso, we were already planning when we would return and try the vari− ous salads, rich soups and, of course, the famous flodni. RATATOUILLE

side dish was the perfect companion. My friend opted for grilled pikeperch served with Jerusalem artichoke puree and Polish style cauliflower. The fish was tasty and perfectly prepared, and we simply fell in love with the Jerusalem artichoke puree – so we ordered an extra portion of it. As a dessert we had mille−feuille with homemade almond cream and a carrot soufflé with dark chocolate and white cof−

MACESZ HUSZÁR 1072 Budapest, Dob utca 26. +36 1 787 6164 www.maceszhuszar.hu www.facebook.com/maceszhuszar

Price range

Private dining

Breakfast

Credit cards accepted

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Budapest Business Journal | March 22 – April 04

WHO'S NEWS

Name ÁKOS JAGUDITS

As of February, Jagudits has been appointed HR director at Jabil Circuit Magyarország’s factory in Tiszaújváros. Jagudits graduated from the Science University of Pécs as a philosophy lecturer and HR manager. Before joining Jabil Circuit, he worked at Sanyo Hungary and Otis Felvonó.

Current company/ position INVITEL / CHIEF OPERATIVE DIRECTOR

Invitel, one of the leading service providers in the Hungarian telecommunications market, has appointed Mártha to the position of Chief Operative Director, mainly responsible for the wholesale and corporate unit, effective from March 18, 2013. Before Invitel, Mártha worked at Westdeutsche Landesbank, at the European subsidiary of the American giant Enron, at the Hungarian State Privatization and Asset Management Agency, then at Magyar Villamos Művek Zrt, and finally at ELMIB Zrt.

Supported by

Send information to research@bbj.hu

Name JÁNOS KÓKAI Current company/ position PWC HUNGARY / ADVISORY GROUP DIRECTOR

Current company/ position JABIL CIRCUIT MAGYARORSZÁG / HR DIRECTOR

Name IMRE MÁRTHA

Do you know someone on the move?

Name GÁBOR ORBÁN Current company/ position ECONOMY MINISTRY / STATE SECRETARY

PwC Hungary has appointed Kókai as a director in its advisory group specializing in providing services for the financial sector. He joined the firm on March 1, 2013. Before joining PwC, he worked at Ness Hungary Kft as a senior consultant and head of business development responsible for managing the company’s financial services portfolio, and in the past two years was head of the financial sector division.

Economy minister Mihály Varga has appointed Orbán as the new state secretary responsible for tax and financial policy. His predecessor, Gyula Pleshinger has been appointed a member of central bank’s Monetary Council for six years. Orbán graduated from the Budapest University of Economic Sciences specialized in finance.

Name IAN MCDONOUGH Current company/ position BBC WORLDWIDE / EXECUTIVE VICEPRESIDENT, CEMA REGION

Name TIBOR PAPP Current company/ position TOTALCAR.HU / EDITOR-IN-CHIEF

McDonough has been named as Executive Vice-President, CEMA of BBC Worldwide as of April 2. He becomes responsible for running all of BBC Worldwide’s businesses in the region. Formerly VP Commercial Development, McDonough joined BBC Worldwide in January 2009 to drive the growth of revenue lines and subscription figures for the business’ portfolio of thematic channels in EMEA, as well as BBC World News.

Papp has been appointed editorin-chief of online car-related portal Totalcar.hu, part of the CEMP media group. His predecessor, Róbert Winkler, will stay at Totalcar.hu as leading editor. Papp has been an automotive journalist since 1995. He started to work at Autó-Motor bi-weekly then moved to work on Motorpresse’s magazines of (Autópiac, Autó Magazin) in 1998. He joined Totalcar.hu in 2008.

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Budapest Business Journal | March 22 – April 04

UPCOMING EVENTS

MAR 27

MAR 28

APR 2

APR 4

150TH ANNIVERSARY OF THE LONDON UNDERGROUND LOCATION Hilton Budapest WestEnd, 1069 Budapest, Váci út 1-3. REGISTRATION 5:30 PM TIME 6 PM ORGANIZER British Chamber of Commerce in Hungary FEE BCCH members, free of charge; non-members,

BUSINESS FORUM WITH DR. JÁNOS MARTONYI, MINISTER OF FOREIGN AFFAIRS LOCATION Marriott Hotel Budapest,

BUSINESS LUNCH WITH PÉTER SZIJJÁRTÓ, STATE SECRETARY FOR FOREIGN AFFAIRS AND EXTERNAL ECONOMIC RELATIONS LOCATION Margit room, Budapest Marriott Hotel, 1052 Budapest,

VISITING THE METRO 4 TUNNEL LOCATION Metro entrance, 1092 Budapest, Fővám tér TIME 4:00-5:30 PM ORGANIZER Chambre de Commerce et d’Industrie

HUF 4,000 + VAT CONTACT www.bcch.com

1051 Budapest, Apáczai Csere János u. 4. REGISTRATION Noon - 12:30 PM TIME 12:30 - 2:15 PM ORGANIZER American Chamber of Commerce in Hungary FEE AmCham members in good standing, HUF 12,700/person; non-members, HUF 31,750/person CONTACT www.amcham.hu

Apáczai Csere János u. 4. REGISTRATION Noon – 12:30 PM TIME 12:30-2:00 PM ORGANIZER British Chamber of Commerce in Hungary Fee BCCH members, HUF 14,000 + VAT; HABA members, HUF 16,000 + VAT; non-members, HUF 18,000 + VAT CONTACT www.bcch.com

Franco-Hongroise FEE CCIFH members, HUF 2,000 + VAT; non-members HUF 2,500 + VAT CONTACT www.ccifh.hu

r e k a sh WH

S JU HING ERE T

N APPE ST... H

The ﬁrst part of the BBJ Shaker series is organized around the topic of property investments in Budapest. Our special guest for the evening is

BUDAPEST CHIEF ARCHITECT SÁNDOR FINTA who will present large−scale developments in the capital and talk about future visions of the city. TIME: MARCH 28, 5 P.M. – 8 P.M. VENUE: HOTEL PRESIDENT (BUDAPEST V., HOLD UTCA 3.) Looking forward to meeting you at the informal gathering of the Budapest Business Journal. ADVERTISEMENT

NEWSLETTERS

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